Shared social responsibility and fair worker wages: evidence from an experimental market

We analyze repeated interactions occurring between workers, sellers and consumers within the framework of an experimental market. By successfully performing a task, workers allow sellers to offer a good through a market. Sellers set the price of goods and decide the wages of workers. Consumers enter the market sequentially and decide whether to accept one of the offers or to leave the market. Our data show that, especially in the first periods of the experiment, some sellers opt to pay high wages to their workers. However, this behavior is not rewarded by consumers, whose purchasing choices are almost exclusively driven by self- interest. This exposes sellers to a high level of price competition and, period after period, the propensity to act in a socially responsible way towards workers vanishes, creating a market scenario in which workers receive the minimum wage and where consumer surplus is significantly higher than those of workers and sellers. This result does not change when we manipulate the social distance between workers and consumers or when we limit opportunities for consumers to relinquish responsibility by avoiding information on workers’ conditions.