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Voluntary Interaction and the Principle of Mutual Benefit

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<mark>Journal publication date</mark>30/06/2023
<mark>Journal</mark>Journal of Political Economy
Issue number6
Volume131
Number of pages41
Pages (from-to)1576-1616
Publication StatusPublished
Early online date3/05/23
<mark>Original language</mark>English

Abstract

Most social preference theories are based on observations of nonvoluntary interactions. Nonselfish behavior may take fundamentally different forms in voluntary interactions, such as market transactions. We investigate the “Principle of Mutual Benefit”—an injunctive norm requiring individuals who enter interactions voluntarily to conform to common expectations about behavior within them. This norm induces patterns of behavior inconsistent with existing social preference theories and allows extrinsic incentives to crowd in trustworthiness. We embed this norm in a model consistent with evidence about promise keeping, gift exchange, and “avoiding the ask.” We present new experimental evidence that people adhere to it.