Fighting Fiscal Awkwardness: How Relationship Strength Changes Consumers’ Approach to Resolving Peer Debt

74 Pages Posted: 8 Apr 2022

See all articles by Alexander Park

Alexander Park

Washington University in Saint Louis, John M. Olin Business School

Cynthia Cryder

Washington University in St. Louis - John M. Olin Business School

Rachel Gershon

University of California San Diego, Rady School of Management

Date Written: February 17, 2022

Abstract

Financial interactions can be uncomfortable. The current research focuses on a particularly uneasy interaction consumers face with their friends and acquaintances: the need to ask for money back. Seven fully preregistered studies (N = 5,543) show that consumers’ approach to resolving peer debt varies based on their closeness with the other person. Specifically, consumers prefer communication methods low in social richness (e.g., digital apps) when requesting money back from weak social connections such as distant acquaintances, however, they prefer communication methods high in social richness (e.g., in-person interactions) when requesting money back from strong social connections such as close friends. Process evidence shows that this pattern occurs because, 1) consumers anticipate discomfort when requesting money back from distant acquaintances in person, driving them away from in-person requests and toward digital apps, and 2) consumers are more averse to appearing impersonal with close friends, driving them away from digital apps and toward in-person requests. In sum, consumers adaptively approach financial interactions based on the relationship dynamics at hand.

Keywords: financial decision-making, personal finance, debt, relationships, digital apps

Suggested Citation

Park, Alexander and Cryder, Cynthia and Gershon, Rachel, Fighting Fiscal Awkwardness: How Relationship Strength Changes Consumers’ Approach to Resolving Peer Debt (February 17, 2022). Available at SSRN: https://ssrn.com/abstract=4070934 or http://dx.doi.org/10.2139/ssrn.4070934

Alexander Park (Contact Author)

Washington University in Saint Louis, John M. Olin Business School ( email )

Cynthia Cryder

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Rachel Gershon

University of California San Diego, Rady School of Management ( email )

La Jolla, CA 92093
United States

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