Economic Transactions among Friends

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.

Moral judgements of fairness-related actions are flexibly updated to account for contextual information

“…However, a smaller portion of participants found equality to be more important than generosity. These individual differences are compatible with previous research showing that multiple norms can be used to distribute resources, and in particular that both generosity and equality norms influence people to act against their economic interest and give up money (Cappelen et al, 2007;Gächter & Riedl, 2006;Mandel, 2006;Shaw, 2013). Our findings extend this, showing that in situations where economic interest is not at stake, generosity and equality norms have varying degrees of influence across individuals in their thirdparty moral judgments.…”

“…In distributive justice scenarios in which one actor decides to distribute resources to one or more others, additional norms may also play a role. These include a tendency to return previous favours (reciprocity norm ;Diekmann, 2004;Fehr & Fischbacher, 2004), or a tendency to assign more to others than to oneself (generosity norm; Mandel, 2006;Shaw, 2013). If an actor needs to share with others who have a history of moral or immoral actions, they show a tendency to share proportionally to others' past moral behaviour (indirect reciprocity norm; Meristo & Surian, 2013;Nowak & Sigmund, 1998), or otherwise scale the outcomes to their perceived moral deservingness (Surian & Franchin, 2017).…”

“…We also found that in addition to generosity and equality, selfishness permits multiple interpretations. Previous research looking at sharing behaviour has not discussed norms for selfishness as separate from equality and generosity, and sharing low portions has been interpreted as behaviour motivated by self-interest (Cappelen et al, 2007;Gächter & Riedl, 2006;Mandel, 2006;Shaw, 2013). In our task, participants' judgements posed no monetary cost to them, in contrast to the first-person dictator game, yet still some participants were more lenient in judging low offers than others, and this variability was orthogonal to variability associated with high and medium offers.…”

An investigation of the endowment effect using a factorial design

“…In our study the effect of both lower WTA and WTP cancels out, so that the endowment effect is insignificant. This is different from previous studies in which it is suggested that friendship should result in a reduced or negative endowment effect (Mandel, 2006;Halpern, 1994Halpern, , 1997. This suggests that characteristics related to the good being traded influences the endowment effect to a greater extent that relationships between traders.…”

The State of Experimental Research in IR: An Analytical Survey

“…20 Paese, Schreiber, and Taylor (2003) also utilize experimental control to vary the presence and absence of an honest disclosure in two-party negotiations, finding that the presence of honesty suppressed competitive behavior having a cooperation-inducing effect. 21 Seizing on the latter theme, Mandel (2006) used two experimental designs to test the impact of the norm of generosity among ''friendly'' actors within the realm of economic transactions, positing (and confirming) a reversal of the ''endowment effect'' (in which sellers offer lower prices than buyers) when the parties have a positive personal relationship. Extending this line of inquiry, Burdein, Lodge, and Taber (2006) introduced experimentation to examine the effects of ''automaticity'' in negotiation settings-that is, the degree to which beliefs and attitudes (and accordingly, positions and interactions) are determined by the subconscious of actors rather than their deliberations.…”