Economic Transactions among Friends

David R. Mandel
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David R. Mandel: Judgment and Decision Making Group, Defence Research and Development Canada

Journal of Conflict Resolution, 2006, vol. 50, issue 4, 584-606

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.

Keywords: generosity; fairness; economic transactions; friendship; endowment effect; norms (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jocore:v:50:y:2006:i:4:p:584-606

DOI: 10.1177/0022002706290432

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