We employ a sensemaking lens to study economic transactions at the micro level, investigating
how social distance affects the logic of exchange. In transcripts of 87 two-party negotiations, we
find that most pairs quickly coordinate on a shared logic of exchange and improvise in accord
with its implied rules throughout their interaction. Negotiators turn to three dynamic processes—
trust-testing, process clarification, and emotional punctuation—when they have difficulty moving
the interaction toward a coherent, mutually agreed upon improvisation. The improvisations take
the form of openness, mutual gain, or haggling, and mediate the effects of social distance on
economic outcomes.