What are economic exchanges? The received view has it that exchanges are mutual transfers of goods motivated by inverse valuations thereof. As a corollary, the standard approach treats exchanges of services as a subspecies of exchanges of goods. We raise two objections against this standard approach. First, it is incomplete, as it fails to take into account, among other things, the offers and acceptances that lie at the core of even the simplest cases of exchanges. Second, it ultimately fails to (...) generalize to exchanges of services, in which neither inverse preferences nor mutual transfers hold true. We propose an alternative definition of exchanges, which treats exchanges of goods as a special case of exchanges of services and which builds in offers and acceptances. According to this theory: (i) The valuations motivating exchanges are propositional and convergent rather than objectual and inverse; (ii) All exchanges of goods involve exchanges of services/actions, but not the reverse; (iii) Offers and acceptances, together with the contractual obligations and claims they bring about, lie at the heart of all cases of exchange. (shrink)

Giving money to others feels good. It is now standard to use the label ‘warm glow feelings’ to refer to the pleasure people take from giving. But what exactly are warm glow feelings? And why do people experience them? To answer these questions, we ran two studies: a recall task in which participants were asked to remember a donation they made, and a donation task in which participants were given the opportunity to make a donation before reporting their affective states. (...) Correlational and experimental results converge towards the conclusion that, if the nature of the warm glow is straightforward, its source is multifaceted. Regarding the nature of the ‘warm glow’, the pleasure people took in giving was mainly predicted by one particular type of positive emotion and was indeed described by participants as ‘warm’. Regarding the underlying psychological mechanisms, warm glow feelings were elicited by positive appraisals regarding the donor’s moral character, positive appraisals regarding the actual impact of the donor’s donation on the welfare of others and a feeling of communion with others. We discuss the theoretical implications of our findings. (shrink)

In his editorial, Nir Eyal argues that a nudge can exploit our propensity to feel shame in order to steer us toward certain choices. We object that shame is a cost and therefore cannot figure in the apparatus of a nudge.

If one wishes to understand what money is, to whom should one turn as the most reliable source of knowledge? Of course, economists propose themselves as the experts on the matter. Who, if not those who study in- terest rates, prices and exchanges could know more about the nature of money? Yet, with a few exceptions, those philosophers in the burgeoning field of social ontology who ask ‘what is money?’ (or, for that matter, ‘what is a marriage?, ‘what is ownership?’, (...) ‘what is a cocktail party?’, etc.) tend to ignore what past and present social scientists maintain on these issues. John Searle comes to mind as having such an insulated approach. Since The Construction of Social Reality, Searle has repeatedly claimed to have found no adequate definition of institutions on the part of those scholars who are the most concerned with them. Understanding Institutions leaves a different impression about the state of the art. In this elegant book, Francesco Guala shows that social scien- tists, economists in particular, can actually be trusted in how they under- stand the notions which they apply. Guala finds in game theory the relevant conceptual framework in which to explore the nature of institutions. Fol- lowing David Hume, David Lewis, and Edna Ullmann-Margalit, he defends a view, termed the rule-in-equilibrium account, which conceives institutions as solutions to coordination problems. For example, to determine what a marriage is, we must look at the range of coordination dilemmas which married couples have resolved: Who cooks? Who picks up the children f rom school? Who washes the dishes? etc. Likewise, the institution of own- ership states who will make use of what? The highway code indicates which side of the road to drive on. Cocktail parties? I gather they specify when to entertain and who to bond with. (shrink)