Will she give you two cookies for one chocolate? Children’s intuitions about trades

Trading is a cornerstone of economic exchange and can take many different forms. In simple trades, one item is often exchanged for another; but in more complex trades, agents can trade different numbers of items, reflecting the differing value of the items being traded. Though young children regularly engage in simple trades, we examine whether they understand a key element involved in more complex trades—the idea that people may subjectively value the same item differently and accept trades that numerically disadvantage themselves in the service of acquiring more of a preferred item. To do so, we ran three studies with 5-to 10-year-old children (N = 314) in which they were asked to predict whether a third party would accept or reject different types of trades. Results revealed that children across this age range predict that a third party will accept a numerically disadvantageous trade when they prefer one resource over another, but not when they have an equal preference for both resources. Importantly, their predictions were not merely a reflection of what they thought was fair, but rather what was in the best interest of the third party—they thought a third party would be more likely to accept an “unfair” trade that benefitted himself rather than someone else. We discuss our findings in terms of what they reveal about children’s early economic intuitions.