Fairness in markets: A laboratory investigation
Abstract It is generally assumed in applications of economic theory that people are concerned only with their monetary wealth. However, bargaining and public choice research indicates that people respond not only to monetary incentives, but also to considerations of fairness. The purpose of this study is to consider the effect of fairness on market behavior. This issue was addressed in a series of eight laboratory markets. The results suggest that fairness can affect market prices, but that the effect may decline over time.