Morals in multi-unit markets

Andreas G. B. Ziegler, Giorgia Romagnoli and Theo Offerman
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Theo Offerman: University of Amsterdam

No 20-072/I, Tinbergen Institute Discussion Papers from Tinbergen Institute

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.

Keywords: replacement logic; social responsibility; markets; externalities; competition; charity (search for similar items in EconPapers)
JEL-codes: C91 C92 D62 (search for similar items in EconPapers)
Date: 2020-10-13, Revised 2021-02-10
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Morals in Multi-Unit Markets (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20200072

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