Ethical consumerism and wage level: evidence from an experimental market

Giacomo Degli Antoni (University of Parma)
Marco Faillo (University of Trento)

Abstract

We analyze repeated interactions occurring between workers, sellers and consumers within the framework of an experimental market. By successfully performing a task, workers allow sellers to offer a good through a market. Sellers set the price of goods and decide the wages of workers. Consumers enter the market sequentially and decide whether to accept one of the offers or to leave the market. Our data show that, especially in the first periods of the experiment, some sellers opt to pay high wages to their workers. However, this behavior is not rewarded by consumers, whose purchasing choices are almost exclusively driven by self-interest. In our interpretation, the connection between workers and sellers that connotes our experimental design, with workers who allow sellers to enter the market, may induce consumers to believe that eventual sacrifices for paying high wages to workers must be entirely on sellers. Our result suggests that the more salient is made the importance of some stakeholders in allowing the firm’s activity, the less consumers’ may be willing to sacrifice their monetary payoff to improve these stakeholders’ condition.

Download the file

©2021 Italian Society of Law and Economics. All rights reserved.