Misaligned mindsets between borrowers and lenders of small interpersonal loans

In a series of six experiments, conducted in both field and laboratory settings, we demonstrate in the context of small interpersonal loans between friends, that individuals operate under different mindsets depending on their role in the loan (lender vs. borrower), which consequently leads to misaligned repayment expectations. Lenders, operating under a communal mindset, do not expect borrowers to repay small amounts that borrowers, operating under an exchange mindset, intend to repay. We show that the two-mindset hypothesis is both state- and trait-dependent and discuss how the observed repayment expectation gap may explain why many small interpersonal debts remain unpaid. We also discuss the contribution to social and economics literature, implications for interpersonal relationships, and directions for future research.