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Traditional economic analysis focuses on commodities whose value depends mostly on their ability to satisfy physical needs. Socio-economics recognizes another class of goods called relational goods. Relational goods are produced in social capital rich relationships. We value relational goods because they satisfy socio-emotional needs for internal and external validation, belonging, and altruism. Agents are assumed to maximize their utility over both commodities and relational goods subject to resource constraints. In the following article (under review) we distinguish between commodities and relational goods by observing agents’ motives for acquiring a particular good. Finally, we propose that much of the “predictably irrational” behavior we observe in everyday exchanges results from not including relational goods in the analysis—a missing variable problem.
Read When Are We Mostly Selfish? The Embeddedness of Relationships in Economic Transactions by Lindon Robison, Trey Malone, Valentina Bali, and Richard Winder.
