Work

Does Fairness Prevent Market Clearing? An Experimental Investigation

Year: 1993

Type: article

Abstract: This paper reports the results of an experiment that was designed to test the impact of fairness on market prices. Prices were determined in a one-sided oral auction, with buyers as price-makers. Upon acceptance of an offer, sellers determined the quality of the good. Buyers offered prices that were substantially above the market-clearing level and expected sellers to respond with high quality levels. This expectation was, on average, confirmed by the behavior of sellers. These results provide, therefore, experimental support for the fair wage-effort theory of involuntary unemployment.

Source: The Quarterly Journal of Economics

DOI: 10.2307/2118338

Authors: E. Fehr, G. Kirchsteiger, A. Riedl

Institutions: TU Wien, University of Vienna, Institut für Höhere Studien - Institute for Advanced Studies (IHS)

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, No poverty, Reduced inequalities

Open Access status: green

OpenAlex ID: W2101311377

FWCI: 15.74

Cites: 13

Cited by: 1,514

Related to: 10