IDEAS home Printed from https://ideas.repec.org/p/gwi/wpaper/2015-21.html
   My bibliography  Save this paper

Surge Pricing and Price Gouging: Public Misunderstanding as a Market Imperfection

Author

Listed:
  • Steven Suranovic

    (Department of Economics/Institute for International Economic Policy, George Washington University)

Abstract

A pure exchange model in an Edgeworth box diagram is used to highlight the basic system of market ethics that is implicitly presumed in all neoclassical economic analyses. A pure exchange model introduces the central tenet of Adam Smith that self-interest motivated traders in a market can achieve mutually beneficial outcomes. But the model also displays outcomes that, while they would not be voluntarily chosen, are nonetheless achievable by the use of force, threats of force, or deception. As such the Edgeworth box is a vehicle to explain requisite ethical principles, including the importance of property rights and perfect information, by demonstrating the unfavorable outcomes that can arise when excessive self-interest (aka greed) is used to take advantage of others.

Suggested Citation

  • Steven Suranovic, 2016. "Surge Pricing and Price Gouging: Public Misunderstanding as a Market Imperfection," Working Papers 2015-21, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2015-21
    as

    Download full text from publisher

    File URL: https://www.gwu.edu/~iiep/assets/docs/papers/2015WP/SuranovicIIEPWP2015-21.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joseph Henrich, 2001. "In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies," American Economic Review, American Economic Association, vol. 91(2), pages 73-78, May.
    2. Samuel Bowles & Robert Boyd & Colin Camerer & Ernst Fehr & Herbert Gintis & Joseph Henrich & Richard McElreath, 2001. "In search of homo economicus: Experiments in 15 small-scale societies," Artefactual Field Experiments 00068, The Field Experiments Website.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anne Corcos & Yorgos Rizopoulos, 2011. "Is prosocial behavior egocentric? The “invisible hand” of emotions," Post-Print halshs-01968213, HAL.
    2. Litina, Anastasia, 2012. "Unfavorable land endowment, cooperation, and reversal of fortune," MPRA Paper 39702, University Library of Munich, Germany.
    3. Liqi Zhu & Gerd Gigerenzer & Gang Huangfu, 2013. "Psychological Traces of China's Socio-Economic Reforms in the Ultimatum and Dictator Games," PLOS ONE, Public Library of Science, vol. 8(8), pages 1-6, August.
    4. Finocchiaro Castro, Massimo, 2008. "Where are you from? Cultural differences in public good experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2319-2329, December.
    5. Frank Cowell & Marc Fleurbaey & Bertil Tungodden, 2015. "The tyranny puzzle in social preferences: an empirical investigation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(4), pages 765-792, December.
    6. Blair Cleave & Nikos Nikiforakis & Robert Slonim, 2013. "Is there selection bias in laboratory experiments? The case of social and risk preferences," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 372-382, September.
    7. Ehmke, Mariah & Lusk, Jayson & Tyner, Wallace, 2010. "Multidimensional tests for economic behavior differences across cultures," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(1), pages 37-45, January.
    8. Cordes, Christian & Richerson, Peter J. & Schwesinger, Georg, 2010. "How corporate cultures coevolve with the business environment: The case of firm growth crises and industry evolution," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 465-480, December.
    9. Michel Zouboulakis, 2010. "Trustworthiness as a Moral Determinant of Economic Activity: Lessons from the Classics," Forum for Social Economics, Taylor & Francis Journals, vol. 39(3), pages 209-221, January.
    10. Kimbrough, E.O. & Vostroknutov, A., 2012. "Rules, rule-following and cooperation," Research Memorandum 053, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    11. Sun-Ki Chai & Dolgorsuren Dorj & Katerina Sherstyuk, 2018. "Cultural Values and Behavior in Dictator, Ultimatum, and Trust Games: An Experimental Study," Research in Experimental Economics, in: Experimental Economics and Culture, volume 20, pages 89-166, Emerald Group Publishing Limited.
    12. Anastasia Litina, 2016. "Natural land productivity, cooperation and comparative development," Journal of Economic Growth, Springer, vol. 21(4), pages 351-408, December.
    13. Maarten Voors & Eleonora Nillesen & Philip Verwimp & Erwin Bulte & Robert Lensink & Daan van Soest, 2010. "Does Conflict affect Preferences? Results from Field Experiments in Burundi," HiCN Working Papers 71, Households in Conflict Network.
    14. von Carnap-Bornheim, Tillmann, 2016. "Irrigation as a Determinant of Social Capital in India: A Large-Scale Survey Analysis," MPRA Paper 69270, University Library of Munich, Germany.
    15. Bluffstone, Randy & Dannenberg, Astrid & Martinsson, Peter & Jha, Prakash & Bista, Rajesh, 2020. "Cooperative behavior and common pool resources: Experimental evidence from community forest user groups in Nepal," World Development, Elsevier, vol. 129(C).
    16. Ehmke, Mariah D. & Warziniack, Travis & Schroeter, Christiane & Morgan, Kari, 2008. "Applying Experimental Economics to Obesity in the Family Household," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(2), pages 539-549, August.
    17. Stefan Kohler & European University Institute, 2006. "Inequality Aversion and Stochastic Decision-making: Experimental Evidence from Zimbabwean Villages after Land Reform," Economics Series Working Papers GPRG-WPS-061, University of Oxford, Department of Economics.
    18. Barr, Jason & Saraceno, Francesco, 2009. "Organization, learning and cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 39-53, May.
    19. Pamela Jakiela & Edward Miguel & Vera Velde, 2015. "You’ve earned it: estimating the impact of human capital on social preferences," Experimental Economics, Springer;Economic Science Association, vol. 18(3), pages 385-407, September.
    20. Gaudeul, Alexia & Giannetti, Caterina, 2011. "The role of reciprocation in social network formation, with an application to blogging," MPRA Paper 34094, University Library of Munich, Germany.

    More about this item

    Keywords

    Trade; Ethics; Pure Exchange; Edgeworth box;
    All these keywords.

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gwi:wpaper:2015-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kyle Renner (email available below). General contact details of provider: https://edirc.repec.org/data/iigwuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.