IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v84y2018i3p692-715.html
   My bibliography  Save this article

Market Interaction and Pro‐Social Behavior: An Experimental Study

Author

Listed:
  • Sean M. Collins
  • John R. Hamman
  • John P. Lightle

Abstract

When actions generate negative externalities for third parties, incentives exist to pass these “morally costly” decisions to others. In laboratory experiments, we investigate how market interaction affects allocations when the right to divide a sum of money between oneself and a passive recipient is commoditized. Allocation to recipients is reduced by more than half when determined by subjects who purchase or keep the right to make the division as compared to a control where subjects are directly assigned the right. Sellers report accurate beliefs about recipient allocations and do not report feeling less responsible the more often they sell the allocation right. The market allocates the right to make divisions more frequently to buyers who allocate more to recipients, but sellers who allocate less to recipients tend to sell less often. Selection cannot solely explain the results, suggesting market interaction itself may directly impact behavior.

Suggested Citation

  • Sean M. Collins & John R. Hamman & John P. Lightle, 2018. "Market Interaction and Pro‐Social Behavior: An Experimental Study," Southern Economic Journal, John Wiley & Sons, vol. 84(3), pages 692-715, January.
  • Handle: RePEc:wly:soecon:v:84:y:2018:i:3:p:692-715
    DOI: 10.1002/soej.12238
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/soej.12238
    Download Restriction: no

    File URL: https://libkey.io/10.1002/soej.12238?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November.
    2. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    3. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    4. Cason, Timothy N. & Savikhin, Anya C. & Sheremeta, Roman M., 2012. "Behavioral spillovers in coordination games," European Economic Review, Elsevier, vol. 56(2), pages 233-245.
    5. Broberg, Tomas & Ellingsen, Tore & Johannesson, Magnus, 2007. "Is generosity involuntary?," Economics Letters, Elsevier, vol. 94(1), pages 32-37, January.
    6. James C. Cox & Vjollca Sadiraj, 2012. "Direct Tests Of Individual Preferences For Efficiency And Equity," Economic Inquiry, Western Economic Association International, vol. 50(4), pages 920-931, October.
    7. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    8. Ben Greiner, 2015. "Subject pool recruitment procedures: organizing experiments with ORSEE," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 114-125, July.
    9. Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002. "Hardnose the Dictator," American Economic Review, American Economic Association, vol. 92(4), pages 1218-1221, September.
    10. Regine Oexl & Zachary Grossman, 2013. "Shifting the blame to a powerless intermediary," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 306-312, September.
    11. , & ,, 2012. "Ashamed to be selfish," Theoretical Economics, Econometric Society, vol. 7(1), January.
    12. Omar Al-Ubaydli & Daniel Houser & John Nye & Maria Pia Paganelli & Xiaofei Sophia Pan, 2013. "The Causal Effect of Market Priming on Trust: An Experimental Investigation Using Randomized Control," PLOS ONE, Public Library of Science, vol. 8(3), pages 1-8, March.
    13. Anya C. Savikhin & Roman M. Sheremeta, 2013. "Simultaneous Decision-Making In Competitive And Cooperative Environments," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1311-1323, April.
    14. Edward P. Lazear & Ulrike Malmendier & Roberto A. Weber, 2012. "Sorting in Experiments with Application to Social Preferences," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 136-163, January.
    15. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    16. Björn Bartling & Klaus M. Schmidt, 2015. "Reference Points, Social Norms, And Fairness In Contract Renegotiations," Journal of the European Economic Association, European Economic Association, vol. 13(1), pages 98-129, February.
    17. Bednar, Jenna & Chen, Yan & Liu, Tracy Xiao & Page, Scott, 2012. "Behavioral spillovers and cognitive load in multiple games: An experimental study," Games and Economic Behavior, Elsevier, vol. 74(1), pages 12-31.
    18. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    19. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May.
    20. Murnighan, J. Keith & Oesch, John M. & Pillutla, Madan, 2001. "Player Types and Self-Impression Management in Dictatorship Games: Two Experiments," Games and Economic Behavior, Elsevier, vol. 37(2), pages 388-414, November.
    21. Lucas C. Coffman, 2011. "Intermediation Reduces Punishment (and Reward)," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 77-106, November.
    22. Dirk Engelmann & Martin Strobel, 2004. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," American Economic Review, American Economic Association, vol. 94(4), pages 857-869, September.
    23. Roth, Alvin E. & Vesna Prasnikar & Masahiro Okuno-Fujiwara & Shmuel Zamir, 1991. "Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study," American Economic Review, American Economic Association, vol. 81(5), pages 1068-1095, December.
    24. Hirschman, Albert O, 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1463-1484, December.
    25. Mikhail Drugov & John Hamman & Danila Serra, 2014. "Intermediaries in corruption: an experiment," Experimental Economics, Springer;Economic Science Association, vol. 17(1), pages 78-99, March.
    26. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
    27. James Andreoni & B. Douglas Bernheim, 2009. "Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects," Econometrica, Econometric Society, vol. 77(5), pages 1607-1636, September.
    28. John R. Hamman & George Loewenstein & Roberto A. Weber, 2010. "Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship," American Economic Review, American Economic Association, vol. 100(4), pages 1826-1846, September.
    29. Björn Bartling & Urs Fischbacher, 2012. "Shifting the Blame: On Delegation and Responsibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 67-87.
    30. Nicholas Bardsley, 2008. "Dictator game giving: altruism or artefact?," Experimental Economics, Springer;Economic Science Association, vol. 11(2), pages 122-133, June.
    31. Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 67-80, October.
    32. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    33. Pierpaolo Battigalli & Martin Dufwenberg, 2007. "Guilt in Games," American Economic Review, American Economic Association, vol. 97(2), pages 170-176, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Choi, Ginny Seung & Storr, Virgil Henry, 2023. "The morality of markets in theory and empirics," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 590-607.
    2. Hillenbrand, Adrian & Verrina, Eugenio, 2022. "The asymmetric effect of narratives on prosocial behavior," Games and Economic Behavior, Elsevier, vol. 135(C), pages 241-270.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Snir, Avichai, 2014. "When choosing to be almost certain of winning can be better than choosing to win with certainty," European Journal of Political Economy, Elsevier, vol. 36(C), pages 135-146.
    2. Zachary Grossman, 2014. "Strategic Ignorance and the Robustness of Social Preferences," Management Science, INFORMS, vol. 60(11), pages 2659-2665, November.
    3. Bartling, Björn & Grieder, Manuel & Zehnder, Christian, 2017. "Competitive pricing reduces wasteful counterproductive behaviors," Journal of Public Economics, Elsevier, vol. 156(C), pages 34-47.
    4. Erik O. Kimbrough & Alexander Vostroknutov, 2016. "Norms Make Preferences Social," Journal of the European Economic Association, European Economic Association, vol. 14(3), pages 608-638, June.
    5. Tobias Regner, 2018. "Reciprocity under moral wiggle room: Is it a preference or a constraint?," Experimental Economics, Springer;Economic Science Association, vol. 21(4), pages 779-792, December.
    6. Bartling Björn & Grieder Manuel & Zehnder Christian, 2014. "Does competition justify inequality?," ECON - Working Papers 158, Department of Economics - University of Zurich, revised Nov 2015.
    7. Breitmoser, Yves & Vorjohann, Pauline, 2018. "Welfare-Based Altruism," Rationality and Competition Discussion Paper Series 89, CRC TRR 190 Rationality and Competition.
    8. Argenton, Cédric & Potters, Jan & Yang, Yadi, 2023. "Receiving credit: On delegation and responsibility," European Economic Review, Elsevier, vol. 158(C).
    9. Christian Thoeni & Simon Gaechter, 2011. "Peer Effects and Social Preferences in Voluntary Cooperation," Discussion Papers 2011-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    10. Ezquerra, Lara & Kujal, Praveen, 2020. "Self-selecting into being a dictator: Distributional consequences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    11. Thöni, Christian & Gächter, Simon, 2015. "Peer effects and social preferences in voluntary cooperation: A theoretical and experimental analysis," Journal of Economic Psychology, Elsevier, vol. 48(C), pages 72-88.
    12. Breitmoser, Yves & Vorjohann, Pauline, 2022. "Fairness-based Altruism," Center for Mathematical Economics Working Papers 666, Center for Mathematical Economics, Bielefeld University.
    13. Halevy, Yoram & Peters, Michael, 2007. "Other Regarding Preferences: Outcomes, Intentions, or Interdependence," Microeconomics.ca working papers peters-07-03-31-11-46-48, Vancouver School of Economics, revised 24 Jun 2009.
    14. Gary Bolton & Eugen Dimant & Ulrich Schmidt, 2018. "When a Nudge Backfires. Using Observation with Social and Economic Incentives to Promote Pro-Social Behavior," PPE Working Papers 0017, Philosophy, Politics and Economics, University of Pennsylvania.
    15. Roman Inderst & Kiryl Khalmetski & Axel Ockenfels, 2019. "Sharing Guilt: How Better Access to Information May Backfire," Management Science, INFORMS, vol. 65(7), pages 3322-3336, July.
    16. Jan Stoop, 2014. "From the lab to the field: envelopes, dictators and manners," Experimental Economics, Springer;Economic Science Association, vol. 17(2), pages 304-313, June.
    17. Bartling, Björn & Engl, Florian & Weber, Roberto A., 2014. "Does willful ignorance deflect punishment? – An experimental study," European Economic Review, Elsevier, vol. 70(C), pages 512-524.
    18. Kerschbamer, Rudolf, 2015. "The geometry of distributional preferences and a non-parametric identification approach: The Equality Equivalence Test," European Economic Review, Elsevier, vol. 76(C), pages 85-103.
    19. Gary E. Bolton & Eugen Dimant & Ulrich Schmidt, 2020. "When a Nudge Backfires: Combining (Im)Plausible Deniability with Social and Economic Incentives to Promote Behavioral Change," CESifo Working Paper Series 8070, CESifo.
    20. Björn Bartling & Manuel Grieder & Christian Zehnder, 2014. "Let the Market Decide: An Experimental Study of Competition and Fairness," CESifo Working Paper Series 4831, CESifo.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:84:y:2018:i:3:p:692-715. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.