Transaction Costs and Personality

There is a variety of methods by which we lower the transaction costs of interacting with other individuals.  Among these is a set of conventions that, while they vary from society to society, can be conceptualized as “politeness.”  As far as I can tell, lowering transaction costs is the one of the main virtues of politeness.  (The only other one I can think of right now is signalling.  By obeying certain conventions regarding politeness, you send a positive signal to others and increase the chance of their interacting with you in a beneficial way.)

The questions I would like to explore is, “Do we need politeness to lower transaction costs?  Are there other, perhaps more efficient ways, to lower such transaction costs?  In fact, do the costs need to exist in the first place, or are they an unnecessary human creation?”  My answer to these is that such transaction costs do not need to exist in the first place.  For example, your boss might say to you, “If you have a few minutes today, would you like to help me by doing X?”  As my friend Roman Jury says, why don’t they just tell you to do what they want you to do?  Especially, if they have authority over you?  Unfortunately, for many people, being so direct comes across as hurtful.  Hence, politeness prevents person A from hurting person B, and therefore, lowers the transaction cost imposed on person B for interacting with person A.  However, it is really person B who is imposing a transaction cost on person A.  Hence, if person B was a stronger person, he could avoid imposing such transaction costs.  In addition, he could enjoy the benefit of talking to people who otherwise would avoid him because of the additional transaction costs.

This argument also applies to those who take things (i.e., the truth) personally.  If people were simply willing and able to handle the truth, they would not impose as large transaction costs on others.  Furthermore, they would end up hearing the truth more often, their ideas would align more closely with the correct ones, and a massive positive externality would result.

My point: People should stop demanding unnecessary amounts of politeness from others.  More interactions would occur (resulting in increased gains from “trade”, i.e., interactions), and they would occur at a lower cost.  All parties would benefit.  In addition, people should learn to handle the truth better and not take it personally.