Act of faith versus voluntary reciprocation: Asymmetric commitments in exchange relationships

Abstract

Financial payments take place in a wide variety of contexts. Expanding on a range of alternative forms of payments outside the common purchase of products and services at a price, this present article focuses on one dimension by which payments differ, namely, whether the payments take place in an exchange with mutual versus unilateral commitment between the buyer and the seller. This framework takes into account the timing and nature of commitments buyers and sellers make in an exchange, thereby further revealing the psychology underlying people's decisions to pay. In particular, the party that is unilaterally committed in an exchange relationship engages in “acts of faith”, whereas the party that is uncommitted engages in decisions of “voluntary reciprocation”.