Gift Contagion in Online Groups: Evidence from Virtual Red Packets.

This article investigates the phenomenon of gift contagion—the social contagion of gift giving—in online groups through the analysis of 36 million digital monetary gifts ("red packets") on a large East Asian social platform, referred to as ABC. Leveraging a natural experiment enabled by the platform’s random gift amount allocation algorithm, the study finds that receiving a larger gift amount causally increases the likelihood and amount of subsequent gifts sent within 24 hours, primarily driven by more recipients choosing to send gifts (the extensive margin). The effect is stronger during festival periods, in groups of relatives, and notably for recipients designated as the "luckiest draw," indicating a group norm that they should initiate the next gift. Additionally, individual and group social network characteristics moderate gift contagion, with less clustered individuals showing stronger contagion effects, and receiving gifts also promotes new in-group social connections. These findings have implications for fostering group solidarity and designing marketing strategies for online gift adoption.