Following the rationale “if I don’t, somebody else will” (Bartling and Özdemir 2023), market participants may prefer to make a trade that increases their monetary payoff rather than let someone else make the same trade (Sobel 2010). If the market transaction presents a moral trade-off, market participants may justify their morally wrong behavior with individual powerlessness in the face of other’s morally wrong behavior (Falk et al. 2020). This rationale — the replacement logic — has mainly been examined in a non-market context (e.g., Bartling and Özdemir 2023; Falk et al. 2020; Fischbacher et al. 2009). The results therein suggest that the activation of the replacement logic strongly depends on the existence of social norms of moral conduct and on the beliefs about individual pivotality. In a market context, Ziegler et al. (2022) find that this rationale explains the full erosion of moral standards and norm compliance in multi-unit markets.

The present experiment ties to this literature and offers an alternative approach to study diffusion of pivotality in markets. Building on the market paradigm in Bartling et al. (2015), we develop a stylized market experiment consisting of sellers, buyers and third parties not involved in the market transaction but potentially harmed by it. We consider a posted-offer market over 24 rounds: sellers first select the price for a product that causes a negative externality on the third party (i.e., a loss of welfare), buyers then enter the market sequentially and decide whether to buy the product or not. The third party suffers the loss of welfare only if a buyer buys the product (“production on demand”). There is always one seller and one third party in the market, only the number of buyers in the market varies across treatments. The experiment consists of three treatments: a treatment condition with one buyer (T1, baseline), two buyers (T2) and four buyers (T4) in the market. In T2 and T4, buyers enter the market sequentially only if the buyer(s) who has (have) previously entered the market did not buy the product. Thus, while the buyer in T1 is fully pivotal and can therefore influence the market outcome (T1); buyers in T2 and T4 are not pivotal as other buyers may enter the market and make the same trade. The experiment will be conducted online in February 2024.

Keywords: markets, social responsibility, replacement logic, online experiment
JEL codes: C91, D01, D40, D62, M14