I think the answer may come down to evolutionary psychology. Consider a world of thin makets--lots of bilateral monopoly bargaining. Conditions are such that the exchange rate between deer and beaver is usual five beaver for a deer. That demonstrates that that rate is usually within the bargaining range defined by the preferences of buyers of deer (sellers of beaver) and sellers of deer (buyers of beaver).
One day, something happens that make beaver especially valuable to me that day. Fortunately for me, you have beaver available to sell. Unfortunately for me, you know they are especially valuable to me (perhaps I am getting married today and custom requires a beaver hat for the bride). So you offer to sell me three beaver for a deer, correctly believing that that rate is within today's bargaining range. I would be better off if I could somehow commit myself to refuse to pay your new price and insist on the old price--since the old price is still within the bargaining range. That commitment would give me more (and you less) of the surplus from today's exchange. I do so by programming myself to believe that five beavers for a deer is the just price of beavers, that anyone who takes advantage of my temporary need to exchange on less favorable terms is a greedy S.O.B., and that it is shameful to give in to greedy S.O.B.'s. Why, you might ask, doesn't the seller of beavers similarly program himself--to believe that anyone who especially values beavers for some reason is obliged to give part or all of the increased surplus from the transaction to the person who provides the beavers, thus committing himself to refuse to sell me beavers at the usual rate just before my wedding? The answer is that I know that the old rate is within the bargaining range, since he sold beavers at that rate last week and nothing has changed for him since. He doesn't know what new rates are now within the bargaining range, since I haven't made past transactions under the new circumstances. So I can commit myself to the rule "the usual price is the just price" much more successfully than he can commit himself to the rule "the price that gives the buyer the usual amount of suprlus is the just price." Now run this through a few hundred thousand years of hunter gatherer societies with thin markets, and you get humans with the commitment strategy hardwired in--people who feel in their guts that the price they are used to paying is the fair price, and anyone who takes advantage of special circumstances to charge them more than that is swindling them and ought to be resented and, if possible, refused. The strategy turns out to be counterproductive in a modern world of thick markets--but we haven't been in such a world very long. For a more extensive discussion of these issues, see the piece of mine webbed at: http://www.daviddfriedman.com/Academic/econ_and_evol_psych/economics_and_evol_psych.html My old article "In Defense of Thomas Aquinas and the Just Price" in St. Thomas Aquinas (1225-1274), Mark Blaug ed., Elgar (1991), reprinted from History of Political Economy. is also relevant to these issues. -- David Friedman Professor of Law Santa Clara University [EMAIL PROTECTED] http://www.daviddfriedman.com/
