Transactions among friends

Abstract

This chapter addresses the inclusion of human behavioral aspects and implications of cognitive psychology and anthropology in decisions relating to the field of behavioral finance. It offers a broad literature review toward identifying opportunities for financial innovations that are based on the notion of friendship. This chapter also presents and discusses empirical results from two evidence-based studies, referencing 400 questionnaires answered by young adults. Principal results suggest that individuals assume different behaviors in transactions among friends rather than among strangers-friends agree about the price attributed to an asset, while strangers show the propensity to bargain. In addition, agents acting on behalf of a friend appear to devote more enforcement, even if they are not receiving any reward or are being monitored.