Social Norms and Market Norms

  • We live in two worlds: one where social norms prevail and the other where market norms prevail. In the social world, we tend to trade on social relationships and reciprocity, in the market world, price and cash govern.
    • When these two world intersect we find it uncomfortable
      • Example, paying a relative for a holiday meal would be confusing and frowned upon.
      • Example, people will do OSS work for free, but if they were to charge for the same work it would be very expensive.
  • Gifts are a way to “pay” without introducing the market world into the social world.
  • People who are primed to be thinking in the “market world” will be more selfish and self-reliant, seeking to spend more time alone and seek tasks that required individual input rather than teamwork.
  • When the market intrudes on the social world, the social norms go away and are difficult to reestablish. Once a social norm is trumped by a market norm, it will rarely return.
    • Introducing market norms into a social norm situation will push out the social norms
  • This also has implications for the way businesses want to mix the two worlds with both their customers and employees.
    • Companies want to have it both ways “we are a family” while also treating the relationship explicitly according to market terms.

and change behavior.

  • When price is not a part of the exchange, we become less selfish maximizers and care more about the welfare of others.



Ariely, D. D. Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions. (Harper Perennial, 2010).