"Americans will spend billions on gifts this Christmas. Inquiring economists want to know why," begins James Miller's piece, "The Economics of Gift Giving", in Tech Central Station. Miller, the author of a wonderful book called Game Theory at Work, points out: "Most people have a better understanding of their own needs than you do and so would presumably rather have, for example, $50 in cash than a $50 gift."
So why do most of us still prefer to give gifts for Christmas and other such occasions? Read the full thing for some theories that attempt to answer that question.