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Seinfeld Economics: The Deal (Elaine's birthday)
by Linda Ghent `

The deadweight loss of gift-giving is the loss of efficiency that occurs when the value of the gift to the recipient is less than the cost of the gift to the giver. In this case, economists argue that cash would be a more efficient gift.

Signaling is the idea that one party (termed the “agent”) credibly conveys some information about itself to another party (the “principal”). For example, in job-market signaling, (potential) employees send a signal about their ability level to the employer by acquiring certain education credentials. The informational value of the credential comes from the fact that the employer assumes it is positively correlated with having greater ability.

Utility is an economic concept referring to the precise degree of personal satisfaction, pleasure, or sense of want-fulfillment an individual derives from consuming some quantity of a good or service at a particular point in time.

 

This Commentary is related to the following Clips:
Seinfeld: The Deal (Elaine's birthday) by Larry David & Jerry Seinfeld (1991) Jerry gives Elaine cash for her birthday, thinking she can spend it on whatever she likes best. But Elaine is mortified; she wanted a thoughtful gift that signaled Jerry had put great thought into his gift. Kramer enters and does just that—gives Elaine a thoughtful gift.