Complementary Consumer Responsibility - The Limits to Immoral Delegation in Markets

Delegation has been shown to facilitate individual immoral behavior. It is however unclear, if these findings extend to markets, where consumers may punish firms who delegate immoral production decisions. I address this question by employing an experimental market paradigm, involving an unfair product, containing a negative externality, and a fair product without externality. Passive delegation of the production decision, with random matching between an owner and a seller, leads to a lower share of the fair product being traded, consistent with the findings on responsibility diffusion. Active delegation in contrast, where owners have a choice over sellers first, increases the share of the fair product relative to passive delegation. Responsibility norm beliefs support a mechanism of complementary consumer responsibility, which assigns more responsibility to consumers when owners have a choice over sellers and, therefore, over the product type offered. Consumers' buying decisions may therefore limit the possibility for delegating immoral behavior, depending on the specific design of the delegation.