Egocentric empathy gaps in social interaction and exchange

Abstract

Social exchange theories posit that people engage in diverse forms of exchange to enhance their own interests. Knowing whom to exchange with and what to exchange, however, requires an understanding of other people's wants and needs. Gaining such an understanding requires skill at perspective taking: assessing what other people's preferences are and how they differ from one's own. We discuss a systematic bias in interpersonal perspective taking that can limit people's ability to reap the benefits of social and economic exchange. People systematically overestimate the similarity between their own perspective and that of other people who are in different psychological situations from their own. We show that such “egocentric empathy gaps” occur in transactions between buyers and sellers. Owners are subject to the endowment effect, valuing their possessions more simply because they own them. Non-owners fail to appreciate the psychological impact of endowment and thus make imperfect choices when interacting with owners. We describe how difficult it is for people to learn about the psychology of endowment and explain how misunderstanding that psychology can lead to enmity and perceptions of unfairness. We discuss the broader relevance of egocentric empathy gaps for social policy and pluralistic ignorance.

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