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Economic Transactions among Friends

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  • David R. Mandel

    (Judgment and Decision Making Group, Defence Research and Development Canada)

Abstract

Two experiments tested the idea that economic transactions among friends are influenced by a norm of generosity. Whereas a fairness norm ought to promote agreement in offers between buyers and sellers, a generosity norm should promote altruistic disagreements caused by sellers offering lower prices than buyers—a reversal of the well-known endowment effect. Supporting the present account, in both studies, offers among friends showed a reversal of the endowment effect. Moreover, disagreement in buying and selling offers was stronger among friends than among acquaintances, and (in study 2) the perceived generosity of offers, but not their perceived fairness, mediated this effect. Finally, both studies demonstrated that generosity is asymmetric: whereas selling offers among friends were generous by all comparative standards, buying offers were not.

Suggested Citation

  • David R. Mandel, 2006. "Economic Transactions among Friends," Journal of Conflict Resolution, Peace Science Society (International), vol. 50(4), pages 584-606, August.
    • Handle: RePEc:sae:jocore:v:50:y:2006:i:4:p:584-606
    DOI: 10.1177/0022002706290432
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    References listed on IDEAS

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