Biases in Christmas Gift-Giving: how to recognize and avoid them
With the Christmas season just around the corner, brands and shops all around the world are starting to promote their newest product lines hoping to attract all those customers looking for the best present to give to their family and friends. The amount of options available is almost overwhelming, nevertheless, most of us find ourselves late and struggling on the 23rd of December trying to find a gift for everyone.
In these chaotic scenarios, individuals tend to be more easily exposed to involuntary and irrational behaviors, and knowing how to recognize them might be of the utmost importance. Even in this case, economics finds a way to help us make the best choice and especially avoid some typical mistakes. This article explores the most common biases we might fall for during the holiday season, and aims to provide some tips for all of us last-minute buyers.
In the customary rush preceding Christmas, it is not unusual to incur in the overwhelming situation where you are presented with so many options to choose between, that you cannot make up your mind on a decision. The most likely event is that you end up with a gift you are dissatisfied with, which may have cost you a small fortune. This might seem paradoxical, as anyone rational would favor having more options than fewer options to choose from. At the same time, this feeling of frustration is completely normal and can be easily explained by the choice overload phenomenon (Dar et al., 2024). This bias implies that the best decisions are made when a fair amount of alternatives is available, and feelings such as dissatisfaction and anxiety might easily arise when too many possibilities are offered. A smart way to avoid these situations is to get to the mall with a more or less clear idea of what you would want to buy, whether a piece of clothing or a book or something for the kitchen!
While having a clear idea of the gift you want to buy might solve some potential mistakes, others immediately arise. It is indeed common for individuals to be strongly influenced in their decisions by some specific aspect of the product they intend to buy, thus neglecting others that may be relevant to make the best choice. This bias is called the take-the-best heuristic (Gigerenzer et al., 1999). For example, if you were to buy a new backpack for a friend and you know that this person loves the color green, you will start looking only for green backpacks. However, when presented with a simple green backpack and a blue one endowed with many pockets and waterproof, you might be influenced to pick the first just because it is green. I bet your friend would be somehow disappointed. A similar pattern of behavior occurs when you decide to gift your friend a backpack of the newest Eastpack line just because you know that they liked the old Eastpack products, even if a “The North Face” backpack would be bigger and more comfortable. The idea that positive impressions of brands or people might influence our feelings in another area is called the halo effect (Leuthesser et al., 1995).
Regarding this last decision, another bias might influence our decisions: you may be tempted to gift something just because it is new. Whether it is an innovative product, or simply just a more recent version of a product already existing, you might feel that the other person would prefer it to older options, even if it has less quality. The recency bias might indeed lead you to buy your friend the newest backpack ever, just for them to find out that it is less spacious and their laptop does not fit!
Lastly, behavioral economics does not only point out our flaws regarding our gift-making capabilities, but it also gives us some tips on what might be best to buy for our friends and family. Evidence points out that individuals feel more satisfied with a product they can build with their own hands, as they feel rewarded for their effort and creativity (Mochon et al., 2012). This famous bias takes its name from the Swedish furniture house Ikea, and it works for everyone, no matter their crafty abilities. So next time, make sure to gift something to craft!
The most important tip, however, comes last: it is important to remind ourselves that while such biases exist and might affect our gift-giving decisions, what truly matters is that presents, no matter how big, small, new they are, are a way to show each other our affection. Therefore, it is crucial to think about the other person’s tastes and look for what might make them happy, so do not fall into the trap of buying something for someone else based on your preferences. Thinking they would want the same thing you like is indeed called the projection bias, and you will want to avoid that!
References:
Dar, A.R. and Gul, M. (2024). The “less is better” paradox and consumer behaviour: a systematic review of choice overload and its marketing implications, Qualitative Market Research. https://doi.org/10.1108/QMR-01-2024-0006
Gigerenzer, G., and Goldstein, D. G. (1999). Betting on one good reason: The take the best heuristic. In “Simple heuristics that make us smart” (pp. 75-95). Oxford University Press.
Leuthesser, L., Kohli, C.S. and Harich, K.R. (1995). Brand equity: the halo effect measure, European Journal of Marketing, Vol. 29 No. 4, pp. 57-66. Available at: https://doi.org/10.1108/03090569510086657
Mochon D., Norton M.I., Ariely D. (2012). Bolstering and restoring feelings of competence via the IKEA effect, International Journal of Research in Marketing, Volume 29, Issue 4, Pages 363-369, ISSN 0167-8116. Available at: https://doi.org/10.1016/j.ijresmar.2012.05.001
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