Friendship Can Trump Financial Self-Interest

Professor Rick Larrick on how disloyalty aversion affects our behavior

June 15, 2017
Behavioral Science


Feelings of loyalty can lead us to make choices that aren't in our financial interests, according to new research from Duke University's Fuqua School of Business.

Professor Rick Larrick found we're less likely to bet against our friends than ourselves, even when we can't control the outcome and the bet makes good financial sense. The new research challenges the traditional assumption in economics that people act in self-interested ways.

While loyalty to others is a laudable instinct, Larrick said there are occasions where it doesn't make financial sense.

"It may feel disloyal, for example, to sell stock in the company you work for," he said. "But from an economic perspective, to hold that stock means you're putting all your eggs in one basket by having both your salary and investments tied to something that shares the same outcome. So diversifying your portfolio away from your own company is one place where you could benefit from turning off this feeling of loyalty."

The research builds on Larrick's previous work showing people are reluctant to bet against a favorite team.

"From an economic perspective, you'd be better off if you can insure this desire for your favorite team to win by betting against them," he said. "That way, at least you have something to show for it if they lose, and you'd be able to spend the winnings on something to make yourself feel better."

But Larrick found people considered their shared identity with a favorite team as more valuable than a personal payoff if they lost. 

"Intuitively, it seems that people might avoid betting against their team out of superstition - no one wants to jinx their team," Larrick said.  "We find, however, that the main driver of the decision is avoiding the feeling of disloyalty."

The new research shows that shared identity extends to close friends - but not to the self, or casual acquaintances.

"We find that most people don't want to bet against their close friends, even when we make the payoff very attractive."

"Disloyalty aversion: Greater reluctance to bet against close others than the self," is newly published in the journal Organizational Behavior and Human Decision Processes. Larrick worked with Carey Morewedge of Boston University, Jill Klein at the University of Melbourne, and Simone Tang, also of Fuqua.

"It is an interesting case in which people prefer not to insure against negative emotional outcomes," Tang said. "I also see it as quite uplifting that people are generally willing to sacrifice their self-interest for their friends."

The researchers studied scenarios both actual and hypothetical. In one, pairs of friends were recruited to play games of chance with a researcher. On average, the 146 participants were more reluctant to bet against their friends than themselves.

In another study, participants were asked to bet on whether a close friend would get a promotion. They were told the friend's chances of success were only one in 10, and the payout for betting against them was much higher -- $50, versus only $5 if the friend was promoted.

"We find that most people don't want to bet against their close friends, even when we make the payoff very attractive," Larrick said. "But they will bet against themselves getting the promotion. When the self is involved, people appreciate the logic and realize that if they don't get the job it would be nice to get the money instead -- but they don't like winning money at the expense of a close other's outcome."

Participants were almost a third less likely to bet against a friend getting the promotion than they were themselves or an acquaintance, the researchers found. The researchers also found participants who considered themselves loyal were less likely to bet against their friends than were those who said they did not highly value loyalty.

"Even though these bets were in private and their friend would never know, people didn't want to see themselves as disloyal people," Larrick said.

But a further study also found that even loyalty has its price: increasing the reward for betting against a friend eventually increased people's willingness to be disloyal.

"Previous studies suggest certain tradeoffs for money over love are taboo, but we showed everyone will make tradeoffs for loyalty, it's just in a different spot for friends than it is for the self," Larrick said. "A practical takeaway is to not be too blinded by loyalty when approaching decisions that entail risk.  Many acts, such as selling company stock or insuring against the loss of a loved one's income, are wise -- even if they're painful to contemplate."

This story may not be republished without permission from Duke University's Fuqua School of Business. Please contact for additional information.

Contact Info

For more information contact our media relations team at