CeDEx Seminar - Vanessa Valero (Loughborough University),

Public Discourse and Socially Responsible Market Behavior

(joint with Björn Bartling, Roberto Weber and Lan Yao)

Abstract: This paper investigates the impact of public discourse on socially responsible market behavior. We conduct a laboratory experiment in which firms and consumers can exchange products that differ in their social impact, with products that mitigate negative externalities imposed on third parties also costing more to produce. Prior to interacting in the market, we provide market actors and third parties with the opportunity to discuss appropriate market behavior. We find that public discourse substantially increases market social responsibility in two distinct samples, from Switzerland and China. We study the underlying mechanisms by having subjects discuss either behind or in front of a veil of ignorance regarding their subsequent roles in the market, varying the inclusion of third parties in the discourse, and studying markets with high (Switzerland) and low (China) pre-existing levels of market social responsibility.