Abstract

Buyers and sellers are generally assumed to set reservation prices in an exchange based solely on personal costs and benefits, without regard for who the counterpart is. However, consumers (e.g., within peer-to-peer marketplaces) often access or are exposed to information about their counterparts. Across five experimental studies, we demonstrate that buyers lower their willingness to pay and sellers raise their willingness to accept when the counterpart is perceived as immoral (e.g., holds opposing moral beliefs), compared to when the counterpart is perceived as moral or when there is no information speaking to the counterpart’s morality. These more extreme valuations appear to capture a desire for retributive punishment, i.e., for reducing the utility that the immoral counterpart would gain from the transaction. Our findings highlight how counterparts are central in consumers’ construction of valuations in the marketplace, and suggest that morally relevant information can act as market friction.

Please contact dip.mkt@unibocconi.it if you wish to attend.