Picture this: It is your birthday, and among the countless toys, cards, and other items you’ve received is a veritable mountain of gift cards. While you are glad that people thought of you, you are also a little confused about why so many people gave you gift cards. After all, they are just a less useful version of cash that’s accepted at a small subset of stores and which you either don’t use, don’t spend all of, or use but have to pay the remaining balance of your purchase out of pocket. Yet despite this, gift cards are by far the preferred gift to cash, which has led to tens if not hundreds of millions of dollars being spent on them each year. One explanation of this phenomenon has its roots in the field of asymmetric information, which can also explain key features of car markets, charities, and more.