Market Interaction and Pro‐Social Behavior: An Experimental Study. (26th September 2017)

• Record Type: Journal Article
• Authors: Collins, Sean M.; Hamman, John R.; Lightle, John P.
• Is Part Of: Southern economic journal. Volume 84:Number 3(2018)
• Page Start: 692
• Page End: 715
• Publication Date: 2017-09-26
• Subjects: D63 -- D47 -- C92; Southern States -- Economic conditions -- Periodicals; Economics -- Periodicals; Economic history; Economics; Southern States; Periodicals; 330.975005
• DOI: 10.1002/soej.12238
• Languages: English
• ISSNs: 0038-4038

Abstract

Abstract : When actions generate negative externalities for third parties, incentives exist to pass these "morally costly" decisions to others. In laboratory experiments, we investigate how market interaction affects allocations when the right to divide a sum of money between oneself and a passive recipient is commoditized. Allocation to recipients is reduced by more than half when determined by subjects who purchase or keep the right to make the division as compared to a control where subjects are directly assigned the right. Sellers report accurate beliefs about recipient allocations and do not report feeling less responsible the more often they sell the allocation right. The market allocates the right to make divisions more frequently to buyers who allocate more to recipients, but sellers who allocate less to recipients tend to sell less often. Selection cannot solely explain the results, suggesting market interaction itself may directly impact behavior.