Academic journal article Libertarian Papers

Morals and Markets: A Response

Academic journal article Libertarian Papers

Morals and Markets: A Response

Article excerpt

I. Introduction

In a 2013 Science article, "Morals and Markets," Armin Falk and Nora Szech present experimental evidence for an alleged causal connection between market interaction and the erosion of moral values. (1) The present paper challenges the conclusions drawn by the authors from their experiment's results by addressing issues with their experiment design, treatments, and operational definitions. The authors' hypothesis was that upon entering a market setting, subjects would show a higher probability of harming a third party in a trade than in an individual decision-making setting. They posit three psychological mechanisms by which individuals may forego their usual moral scruples when encountering other individuals in markets: (1) market participants may engage in guilt-sharing, in which responsibility for whatever negative outcome of some trading arrangement is spread across the involved parties; (2) market participants may gather information about social norms and what is morally acceptable by viewing others' trading arrangements; (3) market participants may be too focused on activities like bargaining and competition to consider whether the moral consequences to the trading arrangement are worth it (p. 708).

II. Falk and Szech's Experiment

The authors used surplus mice as the affected third party in various control and treatment groups in their experiment. All subjects were told that the consequences of their decisions would result in the life or death of one of these mice. In the individual setting, subjects were simply offered the choice of letting the mouse survive and receiving no monetary reward or letting the mouse die and receiving 10 euros. Participants only interacted with the experimenter, and either accepted or rejected a one-time offer of 10 euros with the condition that accepting the money allows a mouse to die. Participants in this setting served as the control group to compare results with the two key treatment groups described below.

In a bilateral market setting, two subjects were paired, one as the buyer and the other as the seller, and the two were to negotiate a price for the mouse's life with an upper limit of 20 euros in total monetary gain. The seller would receive the price and the buyer would receive 20 euros minus the price. If no agreement could be made, the mouse would live and neither participant would receive any monetary reward. Similar to the individual treatment, the seller was "explicitly told that the 'life of the mouse is entrusted to your care'" (p. 708). The specific treatment in this setting was the opportunity to interact and negotiate with a trading partner.

Finally, a multilateral market setting used the same rules as the bilateral setting, but instead of a buyer-seller pair, seven buyers and nine sellers negotiated with each other. Offers were made in successive trading periods and agreements still meant the death of a mouse. The specific treatments in this setting were an increase in the number of participants interacting and an increased seller to buyer ratio, the intention being to foster more aggressive competition among sellers for the limited number of buyers.

The results, i.e., the rate of decisions involving mouse deaths from each treatment, were based on the number of sellers who accepted a price of 10 euros or less, so that each market setting may be compared to the individual setting. Note that any agreement between a buyer and a seller meant a mouse would die, but only the agreements on a price of 10 euros or less were recorded and compared to the control group (whose choice was between 10 euros, which triggered the death of a mouse, or no monetary reward, allowing the mouse to live). The basis for comparison was that in both market treatments, the sellers "could either refuse a monetary amount or accept a monetary amount and kill a mouse" (p. 708).

Results (2)

Falk and Szech reported statistically significant differences in a subject's probability to allow the mouse to die depending on which setting they were assigned. …

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