
Mike Munger on Exchange, Exploitation and Euvoluntary Transactions 06/20/2011
EconTalk
YouTube Description
Mike Munger of Duke University talks with EconTalk host Russ Roberts about the psychology, sociology, and economics of buying and selling. Why are different transactions that seemingly make both parties better off frowned on and often made illegal? In theory, all voluntary transactions should make both parties better off. But Munger argues that some transactions are more voluntary than others. Munger lists the attributes of a truly voluntary transaction, what he calls a euvoluntary transaction and argues that when transactions are not euvoluntary, they may be outlawed or seen as immoral. Related issues that are discussed include price gouging after a natural disaster, blackmail, sales of human organs, and the employment of low-wage workers. https://www.econtalk.org/munger-on-exchange-exploitation-and-euvoluntary-transactions/
Claims (27)
The euvoluntary framework may be analyzing the contents of an empty box because there are essentially no perfectly euvoluntary exchanges, but the ideal type is still useful for understanding people's reactions and diagnosing which non-euvoluntary transactions should be allowed.
Some of these beer cellars in Germany have operated continuously since the 14th century.
For an exchange to be euvoluntary it must satisfy: common-law contract conditions (age, competence, full information/no fraud, conventions of ownership and transfer), no later regret (no time-inconsistency or compulsion), no externalities affecting non-consenting parties, and no duress or force.
The 'no later regret' condition is effectively a rational-expectations requirement: an exchange is only euvoluntary if the actor is so fully informed that they will not regret it later, which is undermined by addiction, time-inconsistency, or the difficulty of predicting one's future preferences.