Morals in Multi-unit Markets

Abstract

We examine how the erosion of morals in markets depends on the market power of individual traders. Previously studied single-unit markets provide market power to individual traders by limiting the roles of two forces: (i) the replacement logic, whereby immoral trading is justified by the belief that others would trade otherwise; (ii) market selection, by which the least moral trader determines quantities. In an experiment, we compare single-unit to (more common) multi-unit markets which may activate these forces. We find that, in contrast to single-unit markets, multi-unit markets show full erosion of morals.Especially the replacement logic drives this finding. In addition, we find that (i) market experience leads to biased social learning, whereby subjects believe that others are less moral than they actually are; (ii) erosion of morals persists partially after multi-unit markets; (iii) changes in social norms are not driving these results.

Editorial: Honesty and Moral Behavior in Economic Games

“…These studies show that some people lie only partially or do not lie at all, because they have an intrinsic cost of lying (a self-image cost) and/or because they do not want to be perceived as liars by others or themselves (image concerns). Another stream of research shows that moral behavior can be eroded in market interactions and voting (see, for instance, Falk and Szech, 2013 ; Bartling et al, 2015 , Falk et al, 2020 ; Ziegler et al, 2020 ), and that the psychological cost of immoral behavior can be reduced by choosing to be ignorant about the consequences of one's, actions on others (see Dana et al, 2007 ; Exley, 2015 ; Grossman and van der Weele, 2017 ; Serra-Garcia and Szech, 2021 ).…”

Why People Oppose Trade Institutions - On Morality, Fairness and Risky Actions

“…7 A related argument is the potential crowding out of intrinsic or moral motivation within market settings (e.g., Frey and Oberholzer-Gee, 1997;Deci et al, 1999;Frey and Jegen, 2001;Bènabou and Tirole, 2003;Bolle and Otto, 2010;Cappelen et al, 2017). A large literature discusses whether the market erodes moral values (see, e.g., Sandel 2012;Falk and Szech, 2013;Bruni and Sugden, 2013;Storr and Choi, 2019;Ziegler et al, 2020;Bartling et al, 2021), yet does not give an unambiguous answer. Further, markets may induce tradeoffs between benefits from trade and moral/ideal standards (e.g., Brekke et al, 2003;Eyckmans and Kverndokk, 2010).…”

Why People Oppose Trade Institutions – on Morality, Fairness and Risky Actions

“…7 A related argument is the potential crowding out of intrinsic or moral motivation within market settings (e.g., Frey and Oberholzer-Gee, 1997;Deci et al, 1999;Frey and Jegen, 2001;Bènabou and Tirole, 2003;Bolle and Otto, 2010;Cappelen et al, 2017). A large literature discusses whether the market erodes moral values (see, e.g., Sandel 2012;Falk and Szech, 2013;Bruni and Sugden, 2013;Storr and Choi, 2019;Ziegler et al, 2020;Bartling et al, 2021), yet does not give an unambiguous answer. Further, markets may induce tradeoffs between benefits from trade and moral/ideal standards (e.g., Brekke et al, 2003;Eyckmans and Kverndokk, 2010).…”