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Market Design and Moral Behavior

Author

Listed:
  • Michael Kirchler

    () (Department of Banking and Finance, University of Innsbruck, 6020 Innsbruck Austria; and Department of Economics, Centre for Finance, University of Gothenburg, 40530 Gothenburg, Sweden)

  • Jürgen Huber

    () (Department of Banking and Finance, University of Innsbruck, 6020 Innsbruck, Austria)

  • Matthias Stefan

    () (Department of Banking and Finance, University of Innsbruck, 6020 Innsbruck, Austria)

  • Matthias Sutter

    () (Department of Economics, University of Cologne, 50923 Cologne, Germany; and Department of Public Finance, University of Innsbruck, 6020 Innsbruck, Austria)

Abstract

In an experiment with 739 subjects, we study whether and how different interventions might have an influence on the degree of moral behavior when subjects make decisions that can generate negative externalities on uninvolved parties. Particularly, subjects can either take money for themselves or donate it to UNICEF for measles vaccines. By considering two fairly different institutional regimes—one with individual decision making, one with a double-auction market—we expose the different interventions to a kind of robustness check. We find that the threat of monetary punishment promotes moral behavior in both regimes. Getting subjects more involved with the traded good has no effect, though, in both regimes. Only the removal of anonymity, thus making subjects identifiable, has different effects across regimes, which we explain by different perceptions of responsibility. This paper was accepted by Uri Gneezy, behavioral economics .

Suggested Citation

  • Michael Kirchler & Jürgen Huber & Matthias Stefan & Matthias Sutter, 2016. "Market Design and Moral Behavior," Management Science, INFORMS, vol. 62(9), pages 2615-2625, September.
  • Handle: RePEc:inm:ormnsc:v:62:y:2016:i:9:p:2615-2625
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    File URL: http://dx.doi.org/10.1287/mnsc.2015.2246
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    References listed on IDEAS

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    1. Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-555, March.
    2. McCloskey, Deirdre N., 2006. "The Bourgeois Virtues," University of Chicago Press Economics Books, University of Chicago Press, number 9780226556635, August.
    3. David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2003. "Monetary and Nonmonetary Punishment in the Voluntary Contributions Mechanism," American Economic Review, American Economic Association, vol. 93(1), pages 366-380, March.
    4. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
    5. Björn Bartling & Roberto A. Weber & Lan Yao, 2015. "Do Markets Erode Social Responsibility?," The Quarterly Journal of Economics, Oxford University Press, vol. 130(1), pages 219-266.
    6. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    7. Alvin E. Roth, 2002. "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Econometrica, Econometric Society, vol. 70(4), pages 1341-1378, July.
    8. Bolton, Gary E. & Ockenfels, Axel, 2012. "Behavioral economic engineering," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 665-676.
    9. Leibbrandt, Andreas & López-Pérez, Raúl, 2012. "An exploration of third and second party punishment in ten simple games," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 753-766.
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    Citations

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    Cited by:

    1. Jannis Engel & Nora Szech, 2017. "A Little Good is Good Enough: Ethical Consumption, Cheap Excuses, and Moral Self-Licensing," Working Papers 2017-025, Human Capital and Economic Opportunity Working Group.
    2. Sandro Casal & Francesco Fallucchi & Simone Quercia, 2017. "The role of morals in three-player ultimatum games," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 16-05R, School of Economics, University of East Anglia, Norwich, UK..
    3. Matthias Sutter & Jürgen Huber & Michael Kirchler & Matthias Stefan, 2016. "Where to Look for the Morals in Markets?," CESifo Working Paper Series 6022, CESifo Group Munich.
    4. repec:eee:jeborg:v:149:y:2018:i:c:p:58-73 is not listed on IDEAS
    5. Irlenbusch, Bernd & Saxler, David, 2015. "Social Responsibility in Market Interaction," IZA Discussion Papers 9240, Institute for the Study of Labor (IZA).
    6. Engelmann, Dirk & Friedrichsen, Jana & Kübler, Dorothea, 2018. "Fairness in markets and market experiments," Discussion Papers, Research Unit: Market Behavior SP II 2018-203, Social Science Research Center Berlin (WZB).
    7. Feess, Eberhard & Schildberg-Hörisch, Hannah & Schramm, Markus & Wohlschlegel, Ansgar, 2018. "The impact of fine size and uncertainty on punishment and deterrence: Theory and evidence from the laboratory," Journal of Economic Behavior & Organization, Elsevier, vol. 149(C), pages 58-73.
    8. repec:eee:pubeco:v:156:y:2017:i:c:p:34-47 is not listed on IDEAS
    9. Engelmann, Dirk & Friedrichsen, Jana & Kübler, Dorothea, 2018. "Fairness in Markets and Market Experiments," Rationality and Competition Discussion Paper Series 64, CRC TRR 190 Rationality and Competition.

    More about this item

    Keywords

    morals; market design; experiment; behavioral economics; punishment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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