John Tierney, reporting in The New York Times on research done on the subject of gift-giving.
In one study, when people were asked to recall a birthday gift they’d given, there was a predictable correlation between price and expectation: the more someone spent on a gift, the more appreciation was expected for it. But when people were asked to recall a birthday gift they’d received, price didn’t matter. The recipients of expensive jewelry and gadgets were not significantly more grateful than those who had gotten T-shirts and books.
This effect was also demonstrated when experimenters asked people to imagine giving or getting a graduation gift. The people who gave an iPod had higher expectations than those who gave a mere CD, but the recipients were equally grateful for either one.
From Science Daily, less may very well be more:
Suppose you're trying to impress a loved one with a generous gift this holiday season, says Kimberlee Weaver, assistant professor of marketing in the Pamplin College of Business. One option is to buy them a luxury cashmere sweater. A second option is to add in a $10 gift card.
If their budget allows, most gift givers would choose the second option, as it comprises two gifts -- one big, one small, Weaver says. Ironically, however, the gift recipient is likely to perceive the cashmere sweater alone as more generous than the combination of the same sweater and gift card. "The gift giver or presenter does not anticipate this difference in perspectives and has just cheapened the gift package by spending an extra $10 on it."
Weaver is part of a research team that recently discovered, through a series of studies, what the team has called the "Presenter's Paradox." The paradox arises because gift givers and gift recipients have different perspectives, Weaver says. Gift givers follow a "more-is-better" logic; recipients evaluate the overall package.