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Morals in multi-unit markets

Author

Listed:
  • Andreas Ziegler

    (University of Amsterdam)

  • Giorgia Romagnoli

    (University of Amsterdam)

  • Theo Offerman

    (University of Amsterdam)

Abstract

We examine how the erosion of morals in markets depends on the market power of individual traders. Previously studied single-unit markets provide market power to individual traders by limiting the roles of two forces: (i) the replacement logic, whereby immoral trading is justified by the belief that others would trade otherwise; (ii) market selection, by which the least moral trader determines quantities. In an experiment, we compare single-unit to (more common) multi-unit markets which may activate these forces. We find that, in contrast to single-unit markets, multi-unit markets show full erosion of morals. Especially the replacement logic drives this finding. In addition, we find that (i) market experience leads to biased social learning, whereby subjects believe that others are less moral than they actually are; (ii) erosion of morals persists partially after multi-unit markets; (iii) changes in social norms are not driving these results.

Suggested Citation

  • Andreas Ziegler & Giorgia Romagnoli & Theo Offerman, 2020. "Morals in multi-unit markets," Tinbergen Institute Discussion Papers 20-072/I, Tinbergen Institute, revised 10 Feb 2021.
    • Handle: RePEc:tin:wpaper:20200072
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    References listed on IDEAS

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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. 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.
    4. 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.

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    More about this item

    Keywords

    replacement logic; social responsibility; markets; externalities; competition; charity;
    All these keywords.

    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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