Abstract:
While economic theories of persuasion emphasize self-interest, others posit an important role for other-regard. For example, a salesperson might describe product features but also try to build rapport. We study these two mechanisms within a simple but rich experimental framework in which sellers, in a free-form conversation, try to convince buyers to raise their valuations for objects. We find that sellers benefit from communication despite their material conflict of interest. Communication affects both buyers’ self-interest and their other-regard. Changes in other-regard are mean zero, but interestingly a minority of sellers target other-regard and substantially outperform their peers. More generally, however, who is buying is actually a better predictor of persuasion than who is selling. Buyer-seller homophily also strongly predicts persuasion: gender-match, for example, more than doubles the sellers’ expected gain.