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Morals in Multi-Unit Markets

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  • Andreas G B Ziegler
  • Giorgia Romagnoli
  • Theo Offerman

Abstract

We examine how the erosion of morals, norms, and norm compliance in markets depends on the market power of individual traders. Previously studied markets allow traders to exchange at most one unit and provide market power to individual traders by de-activating two forces: (i) the replacement logic, whereby immoral trading is justified by the belief that others would trade otherwise and (ii) market selection, by which the least moral trader determines aggregate quantities. In an experiment, we compare single-unit to (more common) multi-unit markets, which may activate these forces. Multi-unit markets, in contrast to single-unit markets, lead to a complete erosion of morals. This is associated primarily with a deterioration in norm compliance: the observed level of immoral trade is in contrast with the prevailing social norm. The replacement logic is the main mechanism driving this finding.

Suggested Citation

  • Andreas G B Ziegler & Giorgia Romagnoli & Theo Offerman, 2024. "Morals in Multi-Unit Markets," Journal of the European Economic Association, European Economic Association, vol. 22(5), pages 2225-2260.
    • Handle: RePEc:oup:jeurec:v:22:y:2024:i:5:p:2225-2260.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvae001
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    Cited by:

    1. Karen Evelyn Hauge & Snorre Kverndokk & Andreas Lange, 2021. "Why People Oppose Trade Institutions - On Morality, Fairness and Risky Actions," CESifo Working Paper Series 9456, CESifo.
    2. Greiff, Matthias & Rusch, Hannes, 2022. "Sharing responsibility for the good," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 101(C).
    3. Huck, Steffen & Kajackaite, Agne & Szech, Nora, 2021. "Editorial: Honesty and Moral Behavior in Economic Games," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12, pages 1-1.
    4. Buser, Thomas & Cappelen, Alexander & Tungodden, Bertil, 2021. "Fairness and Willingness to Compete," Discussion Paper Series in Economics 8/2021, Norwegian School of Economics, Department of Economics.

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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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