IDEAS home Printed from https://ideas.repec.org/a/sae/jocore/v50y2006i4p584-606.html
   My bibliography  Save this article

Economic Transactions among Friends

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0022002706290432
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0022002706290432?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    2. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    3. Mandel, David R., 2002. "Beyond mere ownership: transaction demand as a moderator of the endowment effect," Organizational Behavior and Human Decision Processes, Elsevier, vol. 88(2), pages 737-747, July.
    4. Gilbert Roberts & Thomas N. Sherratt, 1998. "Development of cooperative relationships through increasing investment," Nature, Nature, vol. 394(6689), pages 175-179, July.
    5. Robben, Henry S. J. & Verhallen, Theo M. M., 1994. "Behavioral costs as determinants of cost perception and preference formation for gifts to receive and gifts to give," Journal of Economic Psychology, Elsevier, vol. 15(2), pages 333-350, June.
    6. Parks, Judi McLean & Boles, Terry L. & Conlon, Donald E. & DeSouza, Eros & Gatewood, Wallace & Gibson, Kevin & Halpern, Jennifer J. & Locke, Don C. & Nekich, Jamie C. & Straub, Paul & Wilson, George &, 1996. "Distributing Adventitious Outcomes: Social Norms, Egocentric Martyrs, and the Effects on Future Relationships," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(2), pages 181-200, August.
    7. Carmon, Ziv & Ariely, Dan, 2000. "Focusing on the Forgone: How Value Can Appear So Different to Buyers and Sellers," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 27(3), pages 360-370, December.
    8. Joel Waldfogel, 2002. "Gifts, Cash, and Stigma," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 415-427, July.
    9. Kenneth E. Boulding, 1973. "Love, Fear and the Economist," Challenge, Taylor & Francis Journals, vol. 16(3), pages 32-39, July.
    10. Thompson, Leigh & Loewenstein, George, 1992. "Egocentric interpretations of fairness and interpersonal conflict," Organizational Behavior and Human Decision Processes, Elsevier, vol. 51(2), pages 176-197, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ebo Botchway & Jan Verpooten & Ine van der Beken & Justina Baršytė & Siegfried Dewitte, 2023. "The Endowment Effect in the Circular Economy: Do Broken Products Face Less of a Trading Barrier Than Intact or Repaired Ones?," Sustainability, MDPI, vol. 15(15), pages 1-19, August.
    2. Erica Mina Okada, 2010. "Uncertainty, Risk Aversion, and WTA vs. WTP," Marketing Science, INFORMS, vol. 29(1), pages 75-84, 01-02.
    3. Moon, Wanki & Balasubramanian, Siva K. & Rimal, Arbindra, 2006. "WTP and WTA for Non-GM and GM Food: UK Consumers," 2006 Annual meeting, July 23-26, Long Beach, CA 21057, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Christopher Y. Olivola & Stephanie W. Wang, 2016. "Patience auctions: the impact of time vs. money bidding on elicited discount rates," Experimental Economics, Springer;Economic Science Association, vol. 19(4), pages 864-885, December.
    5. Simon Gächter & Eric J. Johnson & Andreas Herrmann, 2022. "Individual-level loss aversion in riskless and risky choices," Theory and Decision, Springer, vol. 92(3), pages 599-624, April.
    6. Daniel Villanova, 2019. "The extended self, product valuation, and the endowment effect," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 357-371, December.
    7. Amos Schurr & Ilana Ritov, 2014. "The Effect of Giving It All Up on Valuation: A New Look at the Endowment Effect," Management Science, INFORMS, vol. 60(3), pages 628-637, March.
    8. Christina McGranaghan & Steven G. Otto, 2022. "Choice uncertainty and the endowment effect," Journal of Risk and Uncertainty, Springer, vol. 65(1), pages 83-104, August.
    9. Liu, Runqiu & Jiang, Jian & Yu, Chao & Rodenbiker, Jesse & Jiang, Yongmu, 2021. "The endowment effect accompanying villagers' withdrawal from rural homesteads: Field evidence from Chengdu, China," Land Use Policy, Elsevier, vol. 101(C).
    10. Thomas M. Zellweger & Franz W. Kellermanns & James J. Chrisman & Jess H. Chua, 2012. "Family Control and Family Firm Valuation by Family CEOs: The Importance of Intentions for Transgenerational Control," Organization Science, INFORMS, vol. 23(3), pages 851-868, June.
    11. Jiwoong Shin & Dan Ariely, 2004. "Keeping Doors Open: The Effect of Unavailability on Incentives to Keep Options Viable," Management Science, INFORMS, vol. 50(5), pages 575-586, May.
    12. Mehmet Karacuka & Asad Zaman, 2012. "The empirical evidence against neoclassical utility theory: a review of the literature," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 3(4), pages 366-414.
    13. Crusius, Jan & van Horen, Femke & Mussweiler, Thomas, 2012. "Why process matters: A social cognition perspective on economic behavior," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 677-685.
    14. (Xiao-Tian) Wang, X.T. & Ong, Lay See & Tan, Jolene H., 2015. "Sense and sensibility of ownership: Type of ownership experience and valuation of goods," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 171-177.
    15. repec:cup:judgdm:v:2:y:2007:i::p:107-114 is not listed on IDEAS
    16. Jochen Reb & Terry Connolly, 2007. "Possession, feelings of ownership and the endowment effect," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 2, pages 107-114, April.
    17. Shalvi, Shaul & Reijseger, Gaby & Handgraaf, Michel J.J. & Appelt, Kirstin C. & ten Velden, Femke S. & Giacomantonio, Mauro & De Dreu, Carsten K.W., 2013. "Pay to walk away: Prevention buyers prefer to avoid negotiation," Journal of Economic Psychology, Elsevier, vol. 38(C), pages 40-49.
    18. Lin, Chien-Huang & Chuang, Shih-Chieh & Kao, Danny T. & Kung, Chaang-Yung, 2006. "The role of emotions in the endowment effect," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 589-597, August.
    19. Xu, Xiaobing & Chen, Rong & Zhang, Jin, 2019. "Effectiveness of trade-ins and price discounts: A moderating role of substitutability," Journal of Economic Psychology, Elsevier, vol. 70(C), pages 80-89.
    20. Hochman, Guy & Ayal, Shahar & Ariely, Dan, 2014. "Keeping your gains close but your money closer: The prepayment effect in riskless choices," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PB), pages 582-594.
    21. Yan Sun & Barbara Mellers, 2016. "Trade-upgrade framing effects: Trades are losses, but upgrades are improvements," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(6), pages 582-588, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jocore:v:50:y:2006:i:4:p:584-606. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://pss.la.psu.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.