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Social responsibility in market interaction


  • Bernd Irlenbusch

    (University of Cologne)

  • David J. Saxler

    (University of Cologne)


A recent debate raises the question whether market interaction erodes social responsibility. In an experiment, we disentangle three major characteristics of market interaction, diffusion of responsibility, social information, and market framing, and provide evidence for how these characteristics influence behavior when trade harms uninvolved parties. We model the negative externalities from trade by reducing donations to a charity that provides meals to needy children. Our results show that diffusion of responsibility tends to encourage subjects to make purely self-interested decisions. This holds to a much larger extent if the economic transaction is framed as a market. In contrast, social information increases social responsibility in our setting. Observing the behavior of others seems to convince a substantial fraction of people to behave steadfastly, i.e., they avoid trading a good that comes with negative externalities, even if gains from trade are high.

Suggested Citation

  • Bernd Irlenbusch & David J. Saxler, 2015. "Social responsibility in market interaction," Cologne Graduate School Working Paper Series 06-05, Cologne Graduate School in Management, Economics and Social Sciences.
  • Handle: RePEc:cgr:cgsser:06-05

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    References listed on IDEAS

    1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    2. Mathieu Lefebvre & Pierre Pestieau & Arno Riedl & Marie Villeval, 2015. "Tax evasion and social information: an experiment in Belgium, France, and the Netherlands," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 401-425, June.
    3. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
    4. 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.
    5. Conrads, Julian & Irlenbusch, Bernd & Rilke, Rainer Michael & Walkowitz, Gari, 2013. "Lying and team incentives," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 1-7.
    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. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    8. Björn Bartling & Urs Fischbacher, 2012. "Shifting the Blame: On Delegation and Responsibility," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 67-87.
    9. 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.
    10. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages 251-278, October.
    11. Timothy Besley, 2013. "What's the Good of the Market? An Essay on Michael Sandel's What Money Can't Buy," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 478-495, June.
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    Cited by:

    1. 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.
    2. repec:eee:pubeco:v:156:y:2017:i:c:p:34-47 is not listed on IDEAS

    More about this item


    social responsibility; diffusion of responsibility; social information; market framing; experiment;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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