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Where to look for the morals in markets?
Matthias Sutter1,2,3, Jürgen Huber2, Michael Kirchler2,4
11Max Planck Institute Bonn, University of Cologne, Cologne, Germany.
Abstract:
There is a heated debate on whether markets erode social responsibility and moral behavior. However, it is a challenging task to identify and measure moral behavior in markets. Based on a theoretical model, we examine in an experiment the relation between trading volume, prices and moral behavior by setting up markets that either impose a negative externality on third parties or not. We find that moral behavior reveals itself in lower trading volume in markets with a negative externality, while prices mostly depend on the market structure. We further investigate individual characteristics that explain trading behavior in markets with negative externalities.
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