“Win-Win Denial: The Psychological Underpinnings of Zero-Sum Thinking”, 2021-08-09 (; backlinks; similar):
[cf. 2021] A core proposition in economics is that voluntary exchanges benefit both parties. We show that people often deny the mutually beneficial nature of exchange, instead espousing the belief that one or both parties fail to benefit from the exchange.
Across 4 studies (and 8 further studies in the online supplementary materials), participants read about simple exchanges of goods and services, judging whether each party to the transaction was better off or worse off afterward. These studies revealed that win-win denial is pervasive, with buyers consistently seen as less likely to benefit from transactions than sellers.
Several potential psychological mechanisms underlying win-win denial are considered, with the most important influences being mercantilist theories of value (confusing wealth for money) and theory of mind limits (failing to observe that people do not arbitrarily enter exchanges).
We argue that these results have widespread implications for politics and society.
[Keywords: folk economics, zero-sum thinking, intuitive theories, theory of mind, decision making]
…Even though economists have been long convinced by Smith’s arguments, battles against mercantilism and trade-protectionism must be fought anew each generation, as 1817, 1845, 1879, 1962, & 1996 have done in turn. This need to relearn basic economics anew each generation encourages the hypothesis that zero-sum thinking is psychologically natural—a hypothesis endorsed explicitly by economists including and 2008.
The denial of transactions as win-win fits can explain zero-sum thinking—the belief that one party’s gain is another party’s loss. Zero-sum thinking is usually mistaken in economics precisely because individual trades do not make individual parties worse off. Yet it appears to be endemic in people’s thinking about economic matters. Laypeople tend to believe that more profitable companies are less socially responsible ( et al 2017), when the true correlation is just the opposite. Negotiators often perceive themselves as carving up a “fixed pie”, decreasing the chances of a successful outcome (1983; de et al 2000). People believe that the government cannot benefit one group without harming another ( et al 2001) and are particularly inclined to think in zero-sum ways about international trade (2004; et al 2019) and immigration ( et al 2001; et al 2013). But zero-sum thinking also seems to be psychologically natural, occurring across many countries (Rózycka- et al 2015) and political orientations, though manifesting differently among liberals and conservatives (2019). Zero-sum thinking has been noted in numerous settings (albeit not always fallaciously), including students’ thinking about grades (2010), reasoners thinking about evidence ( et al 2019), consumers’ thinking about product features (2007; et al 2014), and even couples’ thinking about love ( et al 2017).
…Overview of Experiments: 4 studies tested win-win denial and its moderators. The general method of these experiments was to ask participants about ordinary exchanges of goods or services—for example, Sally purchasing a shirt from Tony’s store, Eric purchasing a haircut from Paul’s barber shop, or Mark trading his soy sauce for Fred’s vinegar. For each transaction, participants were asked whether or not each party was better off after the transaction. From the standpoint of neoclassical economics, all parties were better off after all exchanges, since people do not voluntarily enter into transactions at a loss, and we sought to avoid conditions under which behavioral amendments to economics would be likely to produce major exceptions. Nonetheless, if people engage in win-win denial, we would expect to see a widespread belief that some parties to these exchanges do not benefit.
The particular pattern of non-benefit can help to test the potential mechanisms for win-win denial. If mercantilism is the culprit, we would expect to see buyers (but not sellers) perceived as worse off and barters as pointlessly failing to benefit either party. On the other hand, the evolutionary mismatch account suggests that people may be better at recognizing positive-sum transactions among like-kind barters rather than monetary transactions, where people might even believe that sellers are made worse off since they give up valuable goods in exchange for intrinsically valueless currency. These hypotheses were tested in Study 1.
Study 2 tested a further implication of mercantilism—that exchanges described in terms of time (labor) rather than money would be seen as more beneficial.
Study 3 tested the theory of mind account by attempting to induce participants to take the perspective of the buyer by giving reasons for the buyer’s purchase.
Finally, Study 4 varied the prices of monetary exchanges to test heuristic substitution account, since very inexpensive products should then be seen as benefiting the consumers at the expense of the seller.
In the online supplementary materials, we report several additional replication studies (Part B), including studies that varied the framing of the transactions or wording of the dependent variable (Studies S1, S4, and S5) and between-subjects replications of key results (Studies S2 & S3). We also pool data across studies to test individual differences in win-win denial (Part C), particularly educational and political predictors.
…Win-win denial seems to be exacerbated by issues in our theory of mind. Specifically, people are naïve realists, making a perspective-taking error in which they interpret their own preferences as ground truth, neglecting that others have different preferences and reasons for their actions. Merely reminding people that the buyers and traders had reasons for their choices (even empty reasons such as “Mary wanted the chocolate bar”) reduced the incidence of win-win denial (Study 3; see also Study S3 in the online supplementary materials). Other results reported in the online supplementary materials were also consistent with this idea. Making the preference of buyers and traders more salient reduced win-win denial (Study S4), as did asking participants to rate the parties’ perceived gain or loss (Study S5). Together, these results suggest that people do not spontaneously reflect on the fact that parties to exchanges have reasons for their behavior, leading them to discount potential gains from trade.
…Perhaps surprisingly, we find in a separate project ( et al 2021 [“Zero-sum thinking in self-perceptions of consumer welfare”]) that consumers often claim that their own past transactions make them either worse off or no better off, and even make similar claims about planned future transactions. Thus, there appears to be a striking attitude-behavior gap here: Whereas people’s lay theories of exchange seem to produce strong intuitions that consumers are often made worse off by their purchases, these attitudes do not seem to manifest (in most cases, fortunately) in their actions. Perhaps this gap is driven by differences in what is considered relevant when evaluating exchanges more abstractly from a distance versus more concretely from a nearby temporal perspective (2010), with the latter conditions prompting more thoughts about the consumption experience itself (see Future Directions above). In any case, we think this is a genuine puzzle deserving of further research.