Do legal standards affect ethical concerns of consumers?

David Danz, Dirk Engelmann and Dorothea Kübler

European Economic Review, 2022, vol. 144, issue C

Abstract: We study ethical concerns of consumers in experimental markets. Consumers have monopsony power, firms set prices and wages, and workers are passive recipients of a wage payment who can be protected by a minimum wage regulation. We find that the majority of consumers occasionally deviate from their self-interest and that markets with such consumers exhibit substantially higher wages. Consumers implement fair allocations using two distinct strategies: they split their demand between firms, or they buy all units from the firm with the higher price and higher wage. The two strategies can be captured by maximin preferences and indirect reciprocity in Charness and Rabin’s (2002) reciprocal fairness model. A minimum wage raises average wages although it weakens consumers’ fairness concerns.

Keywords: Fairness; Consumer behavior; Minimum wage; Experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C92 D83 D84 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Do Legal Standards Affect Ethical Concerns of Consumers? (2020)
Working Paper: Do legal standards affect ethical concerns of consumers? (2008)
Working Paper: Do Legal Standards Affect Ethical Concerns of Consumers? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:144:y:2022:i:c:s0014292122000095

DOI: 10.1016/j.euroecorev.2022.104044

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