December 21, 1994

Gift-giving, social scientists tell us, is governed by something called the exchange theory. This has nothing to do with the scene on Dec. 26, when people converge on stores, gifts in hand, saying, "too large," "too small," and, "does it come in mauve?" Instead, the exchange theory holds that reciprocity in gift-giving adds glue to social bonds.

The Communist Party, U.S.A. had a coming-out party recently. It laid out doughnuts and invited more than 100 reporters. When a handful showed up, they were ushered into the inner sanctum of party headquarters in Manhattan. An elderly man with watery blue eyes entered slowly, using a cane. He was introduced as Gus Hall, the longtime party chairman. He began speaking about his party's accomplishments and its bright future.

Heeding the growing uproar about a tiny arithmetic flaw in its Pentium personal computer chip, the Intel Corporation abruptly reversed course today and said it would offer all customers a free replacement part upon request. It may still be two months or more before replacement chips are widely available. That will delay relief for people who already own Pentium-based PC's made by Compaq, I.B.M. and other companies. And the lag will leave potential customers with the decision of whether to buy now and replace later, or delay the purchase until new Pentium-chip PC's reach the market without the flaw.

In the cramped basement cubicle where Hsu Wen-ping lived out his final days, a scroll hangs on the wall with two lines of Chinese characters that seem to cry out with the desperation of his life: "If the wrongs against me cannot be righted with a pen, then only a gun can defend my honor." On Sunday, Mr. Hsu apparently took those words into the streets, gunning down three people in a wild attack in Queens that culminated with his own death in a burst of police gunfire, the police said.

Data on Smoking Is Faulted Data frequently cited by the tobacco industry to show that secondhand smoke is not hazardous in the workplace were falsified, say three workers who made the measurements for a private company. Page D23. Tough Sailing for the QE2 The Queen Elizabeth 2, due in New York tomorrow, had rough seas and left behind about 500 angry passengers because of unfinished renovations, one more episode in a bad year for the cruise industry. Page A19.

Business Technology In an about-face, Intel pledged free replacement chips to owners of personal computers powered by its Pentium chip. The new policy is expected to help resolve an intensifying public relations crisis over the company's initially dismissive response to reports of a tiny arithmetic flaw in the Pentium. [ Page A1. ]

COURT PROTECTS FREE SPEECH IN MALLS Declaring that shopping malls have replaced the parks and squares that were "traditionally the home of free speech," the New Jersey Supreme Court ruled that the malls must allow access to protesters who want to distribute leaflets on social issues. A1.

Mayor Rudolph W. Giuliani announced yesterday that he would pare the size of the Offtrack Betting Corporation, part of a long-term effort to make the agency profitable and eventually sell it to a private company. The Mayor's plan calls for closing nine OTB branches and eliminating more than 130 positions, most of them through a new severance offer.

Senator Phil Gramm of Texas is seeking the Republican Presidential nomination in 1996 and for months had been talking about gaining a spot on the Finance Committee, which will be at the center of efforts to cut taxes and change the welfare system.

The Microsoft Corporation may yet rue the day it decided to call its new operating system Windows 95. Microsoft said today that the software -- it is the much-anticipated successor to Windows 3.1, the most successful computer operating system yet -- may not be available until August, the third delay for a product that was originally supposed to be shipped this month.

HE was all done up for the photo op with Santa -- hair brushed, nails clipped, fuzzy little sweater. But when his turn came to sit on the red velvet lap, he balked as 2-year-olds are wont to do. "Where's the mommy?" said the photographer in an elf outfit. A mortified-looking woman came forward. "Harold," she implored, "'Harold . . . " The daddy cut in: "Sit! Sit!"

Giving the clear impression that he had decided to stay on as the head of the New York City school system, Chancellor Ramon C. Cortines yesterday offered an impassioned defense of his 16-month tenure and said he would try to improve his working relationship with Mayor Rudolph W. Giuliani. Breaking a long silence after weeks of unrelenting criticism by the Mayor, Mr. Cortines declared in an interview that he was satisfied with his achievements so far.