Improvisation and the logic of exchange in socially embedded transactions

We use a sensemaking lens to illuminate the micro-processes underlying socially embedded transactions, investigating how social ties affect the logic of exchange governing the transaction. In transcripts of 87 two-party negotiations, we find that most pairs quickly coordinate a shared logic of exchange and improvise in accord with its implied rules throughout their interaction. The improvisations take the form of opening up, working together, or haggling. Negotiators turn to three dynamic processes trust testing, process clarification, and emotional punctuation-when they have difficulty moving the interaction toward a coherent, mutually agreed upon improvisation. We examine in detail the few asymmetric negotiations, which do not involve a shared logic of exchange. Social ties ease coordination within the negotiation and nearly eliminate asymmetry. We explore how an understanding of the micro-processes underlying negotiations reveals the underpinnings of market exchange.