Question

negative impacts on moral values

Answer 1

The experimenters obviously considered it moral to be willing to forego some money to keep the mouse alive, but immoral to simply keep the money and let the mouse die. (As part of the experiment, the participants watched a short movie of how a mouse would die, so nobody had any illusions. For the mouse, the outcome was a matter of life or death.) We would have preferred it if the researchers had called the decision to keep a mouse alive a personal value rather than a matter of morality, as we do not agree that allowing a mouse to die is immoral. (Such values are intensely subjective. In the Jaine moral system, for example, it would be considered immoral to kill even an ant.)

In the individual decision option, Option A, a mouse would be allowed to live but the participant would receive no money. Option B meant that the mouse would die but the participant would receive 10 euros. There were 124 participants in the individual decision option, of which 45.9% were willing to allow the mouse to die in order to get 10 euros. In the bilateral market (2 participants traded for prices), 72.2% of sellers were willing to let the mouse die for prices below or equal to 10 euros. This difference was statistically significant from the individual decision option. In the multilateral market (where there were 7 bidders), 75.9% of sellers were willing to kill a mouse for less than or equal to 10 euros. This, too, was statistically significantly different from the individual decision option.

The more bidders, the lower the average price offered in exchange for allowing the mouse to live. (In a separate experiment, people could either keep and spend a coupon or take a certain amount of money. The effects of numbers of bidders in this condition revealed no significant price trend.) The authors conclude, therefore, that the market had the effect (and the larger the market, the greater the effect) of reducing the price paid for a moral outcome (allowing the mouse to live).

The authors sum it up: “We therefore agree with the statement quoted at the beginning that we as a society have to think about where markets are appropriate—and where they are not.”

We offer the following comments:

Power Law

The decreasing price paid as the number of bidders increases looks a lot like a power law, which is a characteristic of self-organizing systems as described in the book Ubiquity by Mark Buchanan (Three Rivers Press, 2000). As explained in Ubiquity, for example, if you look at a sandpile on which grains of sand are being dropped one by one, eventually at some point you will have an avalanche. If you double the amount of energy released by the avalanche, the avalanche becomes four times less likely. You see the same pattern with earthquakes: the larger the earthquake, the less likely that size event will occur, consistent with the mathematical power law you see with avalanches.

Thus, we propose that the higher the number of bidders in the market, the lower the price paid to avoid harms to third parties, is a power law, something that is mathematically built into markets as self-organizing systems. It is not that people become less moral as the number of bidders increases; it is that the likelihood of the decision of each individual determining the average price becomes less and less as the number of bidders increases.

Political Decision Making vs. Markets

The researchers wonder, as indicated in their summation, whether under some circumstances decisions should be made by a different mechanism than markets. Whether a political process would result in a more “moral” outcome than a market is we believe questionable. The more voters, the less likely that your decision will affect the outcome of an election and, hence, the less likely that voters will concern themselves with harms to third parties. Moreover, the less likely that your decision will decide the outcome of an election, the less likely you will have an incentive to be well informed before you vote, the “rational ignorance” problem. The authors note that, “it is a pervasive feature of market interaction to impose costs on uninvolved third parties.” We agree. Yet, there can be no doubt that the production of externalities (costs to uninvolved third parties) is a pervasive feature of political processes.