DO MARKETS ERODE SOCIAL
RESPONSIBILITY?
BJÖRN BARTLING, ROBERTO A. WEBER, LAN YAO
Forthcoming in: Quarterly Journal of Economics
A presentation by Till Strunge
Introduction
Study 1
Agenda
•
Introduction to the topic
•
Study 1
•
Study 2
•
Conclusion
Study 2
Conclusion
Introduction
Reference: www.utdallas.edu
Study 1
Study 2
Conclusion
Reference: www.img.welt.de
Introduction
Study 1
Study 2
Conclusion
DO MARKETS ERODE SOCIAL
RESPONSIBILITY?
Introduction
Study 1
Study 2
Conclusion
The Testing
•
Test social responsible behavior in laboratory
market
•
•
Test whether cultural differences madder
•
•
Identify key characteristics
Switzerland vs. China
Market condition vs. non market condition
•
Ex. Dictator game
}
}
Study 1:
613 subjects
CH
Study 2:
616 subjects
CH/CN (1:1)
Introduction
Study 1
Study 2
Conclusion
The market game
Types of products:
• Fair (e = 0)
Trade
Firm
Consumer
• Unfair (e = 1)
Third party
Negative effect
if unfair
product is
traded.
Introduction
Study 1
Study 2
The market game
•
6 firms, 5 consumers, 5 third parties
•
Post offer market, total information
•
24 rounds
•
Start wealth: 100
•
Products worth: 50
•
Negative impact: -60
•
Net welfare impact = 50-60 = -10
•
Production cost cunfair = 0 cfair= 10
Conclusion
Introduction
Study 1
Study 2
Conclusion
The market game
Πfirm
=
{
100 + p – (1 - e) c
If firm sells product
100
otherwise
{
100 + 50 - p
If consumer buys product
100
otherwise
{
100 - 60 e
If matched with an exchange
100
otherwise
Πconsumer =
Πthird party =
e ε (0,1)
Introduction
Study 1
Study 2
The market game – Base line
•
99% traded products
•
44.3% market share of
fair product
•
Price premium (pp)
between 2.7 and 4.8
•
pp < 10 (= cfair)
Conclusion
Introduction
Study 1
Study 2
Conclusion
The market game – Increased competition
•
8 instead of 6 firms
•
Lower prices for both
products
•
Price premium (pp)
increases to 8
Introduction
Study 1
Study 2
Conclusion
The market game – Incomplete information
•
Consumer can be
informed
•
•
for free
•
Cost = 1
73% (free) / 42% (costly)
of costumers seek info.
•
Market share decreases to
40 %
Introduction
Study 1
Study 2
Conclusion
The market game – high production cost
•
c = 40 instead of 10
•
Implements a change of
technology
•
Market share drops do
24%
•
Premium increases
Introduction
Study 1
Study 2
Conclusion
Predicted utility funciton of consumer
Θ weight of own payoff
z varies between subjects an
x own payoff
periods (gender, age...)
γ weight of third party payoff
ε idiosyncratic extreme-value
Y payoff of third party
radom utility error
Introduction
Study 1
Study 2
Conclusion
Cultural differences China vs. Switzerland
•
Repeat test in
Switzerland and in China
•
•
CH: 48.3 %
•
CN: 16.3 %
Questionnaire shows
similar result
Introduction
Study 1
Study 2
Conclusion
Market vs. no market condition
•
Dictator game under similar conditions
•
Players:
A
•
B
C
Allocations from earlier experiments (p1e=1= 15,
p1e=0=25...)
•
B (consumer) decides which one to apply
=> Players A and C get assinged
Introduction
Study 1
Study 2
Market vs. no market condition
Conclusion
Introduction
Study 1
Study 2
Conclusion
Conclusion
•
Non-trivial share of socially responsible
products are supplied and demanded in all
market conditions
•
Most important feature: technology costs
•
Not only driven by market characteristics
Introduction
Study 1
Study 2
Conclusion
DO MARKETS ERODE SOCIAL
RESPONSIBILITY?
„In no condition does this level [...][of social
responsibiltiy] erode over time with repeaded
market interaction. [But][...]subjects behave less
socially responsibly in market setting.“
Introduction
Study 1
Study 2
Conclusion
Thank you for your attention.
Do you have any questions?
Introduction
Study 1
Study 2
Conclusion
References
For this presentation was mainly one article used.
Used pictures are either directly referenced on the
page or copied from the article:
BARTLING, Björn; WEBER, Roberto A.; YAO,
Lan. Do markets erode social responisibility?.
Forthcoming in: Quarterly Jornal of Economics,
2015