Morals in Multi-unit Markets

Tinbergen Institute Discussion Paper 2020-072/I

102 Pages Posted: 7 Dec 2020 Last revised: 24 Jun 2022

See all articles by Andreas Ziegler

Andreas Ziegler

University of Amsterdam

Giorgia Romagnoli

CREED; Tinbergen Institute

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE)

Date Written: February 9, 2021

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

JEL Classification: D62, C91, C92

Suggested Citation

Ziegler, Andreas and Romagnoli, Giorgia and Offerman, Theo, Morals in Multi-unit Markets (February 9, 2021). Tinbergen Institute Discussion Paper 2020-072/I, Available at SSRN: https://ssrn.com/abstract=3710813 or http://dx.doi.org/10.2139/ssrn.3710813

Andreas Ziegler (Contact Author)

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

Giorgia Romagnoli

CREED ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4294 (Phone)
+31 20 525 5283 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
133
Abstract Views
1,156
rank
293,207
PlumX Metrics