of moral objections to trading emissionpermits Buying the right to do wrong – An experimentaltest Resource and Energy Economics

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ContentslistsavailableatScienceDirect

Resource and Energy Economics

j ou r n a l h o m e p a g e :w w w . e l s e v i e r . c o m / l o c a t e / r e e

Buying the right to do wrong – An experimental test of moral objections to trading emission permits

Ragnhild Haugli Braaten

^a

, Kjell Arne Brekke

^b^,∗

, Ole Rogeberg

^c

aOsloEconomics,Norway

bDepartmentofEconomics,UniversityofOslo,Norway

cTheRagnarFrischCentreforEconomicResearch,Oslo,Norway

a r t i c l e i n f o

Articlehistory:

Received22May2013

Receivedinrevisedform8June2015 Accepted12July2015

Availableonline20July2015

JELclassiﬁcation:

C9 Q3

Keywords:

Tradablepollutionrights Experiment

Morality

a b s t ra c t

Moralobjectionstoquotatradearecommoninpublicdiscussion.

Theunderlyingmoralreasoningisoftenhardtoextractfromthe public’srhetoric,andeconomistsoftenclaimthattheobjections areduetomisunderstandings.Inthispaperwetestexperimentally one possible objection totrading emission rights: that selling pollutionrightsisobjectionablebecauseitinvolvestradeinthe right todo somethingwrong. Theexperiment is phrased in a neutral language to avoid invokingsubjects’ priorattitudes to tradingpollutionpermits.Intheexperiment,subjectsearnmoney fromusingstickersthatinflictlossesonothers.Aftertheinitial rounds,theuseofstickersislimitedandtherightstousestickers are tradable. We observe no reluctance to trade these rights comparedtoacontroltreatmentwithidenticalincentivesbutno externalities.Inafinalstage,subjectsvoteonwhetherstickers shouldbetradableornot.Subjectsinbothtreatmentsarealmost unanimous in the support to trade. A majority of third party subjectsaskedtojudgetheexperimentalprocedures, however, indicatedthatthemarketmadetheuseofstickersseemmore moral.A postexperimentsurveyshowedthatoursubjectpool hadanegativeattitudetoreallifetradeofemissionquota.The experimentfindsnoindicationthatthisattitudeisduetoaconcern overtradablequotaslegitimizingmorallyobjectionableactions.

∗Correspondingauthor.Tel.:+4748295384;fax:+4722855035.

E-mailaddresses:[email protected](R.H.Braaten),[email protected](K.A.Brekke),[email protected] (O.Rogeberg).

http://dx.doi.org/10.1016/j.reseneeco.2015.07.002

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1. Introduction

Whenthe“environmentalrevolution”arrivedinthe1960s,economistswerereadyandwaiting.

-Openingstatementof“Thetheoryofenvironmentalpolicy”(BaumolandOates,1988) TheTimeswasﬂoodedwithscathingletters—mostlyfromeconomists,someofthemmyHar- vardcolleagues.Ifailedtounderstandthevirtueofmarkets,theysuggested,ortheefﬁciencies oftrade,ortheelementaryprinciplesofeconomicrationality.

-PhilosopherMichaelSandelonreactionstohismoralargumentsagainsttradableemission quotas(Sandel,2012)

Economistswerequicktosuggestenvironmentaltaxesandtradableemissionquotaswhenthe modernenvironmentalmovementarrived,but,asBaumolandOates(1988)pointedout,thesesolu- tionswerenotwellreceived.¹Commandandcontrolwerepreferredtoeconomicinstrumentslike quotasandtaxes,and whilesomeschemesinvolvingtradableemissionquotas havebeenimple- mentedrecently,legalinstrumentsstilldominate.Therewas,andstillis,aconsiderableresistance towardbothtaxesandtradablequotas,oftenlacedwithmoralindignation.Thisisespeciallysofor tradableemissionquotas.

Whydomanynon-economistsobjectsostronglytoanideathateconomiststypicallysupport?Do non-economistsfailtounderstandthebasicideabehindquotatrade,orhaseconomictrainingsome- howmadeeconomistsblindtomoralissuesthatothersﬁndobvious?Toexaminethis,wedesignedan experimentwhereparticipantscouldtradetherightstodowrong.Thewronginvolvedusing‘stickers’thatbroughtgaintotheuserandharmtotheothergroupmembers,withnetharmoverall.We examinedwhetherparticipantsfoundtradeintherightstousestickersobjectionablebothbefore andafterexperiencewithtradeinadouble-auctiontradingmarket.Thedesigndidnotinvokeacli- mate/environmentalcontext,andtheuseoftermssuchas“quotas”or“emissions”wasavoidedsoas nottotriggerpriorconvictionsonthemoralityofemissiontradingschemes.

Skepticismtoward tradableemission quotasseemstobewidespread.Askedin2010whether

“Norwayoughttotakeitsshareofresponsibilityforgreenhousegasemissionsbybuyingemission quotasfromothercountries,”anationallyrepresentativesurveyoftheNorwegianpopulationfound 46%disagreeingwiththestatement.²Thisnegativeattitudetotradableemissionsquotasisalsoappar- entinofficialNorwegianpolicy.Followinganintensepoliticaldebateonthemoralityofbuyingquotas abroad,thefinalpoliciesemphasizedtargetsfordomesticabatementsattheexpenseofcostefficiency (EyckmansandKverndokk,2010).

Oneexplanationforthisskepticismmaybethatpoliticiansandthepublicfailtounderstandhow atradableemissionwouldworkandwhatitwouldachieve.Alternatively,itmaybeeconomiststhat areunabletoseeamoralargumentthatnon-economistsemphasize.Pastexperimentalresultshave shownthateconomicsstudentstendtoactmoreselﬁshlythanotherstudents.Thismaybedueto selection(FreyandMeier,2005),butitmayalsoreﬂecttheeffectsoftheirtraining:economistsare typicallytaughttofocusonoutcomes,leadingtoanemphasisontotalcostsandemissionsinour context.IfpolicyAyieldsbetterconsequencesforeveryonethanpolicyB,economistswilltendtosee Aasthebestoption,evenifthispolicy“legitimizes”somethingothersfeelshouldbestigmatized.

The view that markets legitimize objectionable actions appears in many contexts. We have observeditintalkshows,cartoons,anddiscussionswithnon-economists.Atypicalargumentisto stateorsuggestthatthelogicofquotatradingwouldextendtoquotasforanynumberofbadorillegal activities.Thesatiricalwebsitecheatneutral.comclaimsto“highlightsomeoftheissuessurrounding carbonoffsetting”byprovidingpeoplewhocheatontheirspousestheopportunitytopayothersto refrainfromdoingso–thusoffsettingthesin.By“fundingsomeoneelsetobefaithfulandNOTcheat [t]hisneutralizesthepainandunhappyemotionandleavesyouwithaclearconscience”.Similarly,a

1Thisisnottheonlyissuewhereeconomistsandnon–economiststendtodisagree,seeSapienzaandZingales(2013).

2From“ThelargeNorwegianclimate-andenvironmentalsurvey2010”conductedbyIpsosMMIandCICEROCentrefor ClimateStudies(“Denstorenorskeklima-ogmiljøundersøkelsen2010”).

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politicalcomicstripbyKenFishersatirizedtheCleanAirActin1992byshowingahomeowner(Ryder) surprisingaburglarinhishome.Usingatelephoneexchangecalled“crimebrokers”hesellshisright tokilltheintrudertothebrokers,whosellitontoacriminal(Sluggo).“Thus,Ryderovercomplied withthelawsothatSluggocouldundercomply.Thesamenumberofdeathresults,butwithamore efﬁcientallocation”.

Toeconomists,suchargumentsbyanalogywillseemlikeevidenceofabasicmisunderstanding.

Commontomanyoftheexampleswehavecomeacross,however,isthebeliefthatmarketsforan activitylegitimizetheactivityandunderminemoralnorms.Inthislight,theethicalargumenthastwo parts:onesupportingtheclaimthatanactivityXisunethical,andonesupportingtheclaimthata marketinactivityXwoulderodeethicalnormsagainsttheactivity.

AsystematicandexplicitstatementofthisargumentcomesfromHarvardphilosopherMichael Sandel,whoﬁrstpresentedtheargumentina1997NewYorkTimesop-ed(Sandel,2005),restatingit inhisrecentbook(Sandel,2012).HearguesthatexcessiveCO2emissionsaremorallyobjectionable, andthatthismorallyobjectionableactivityislegitimizedbyinstitutingatradingscheme.Thismakes thetradingschemeitselfimmoral.

Thereissomeevidencethatmarket-likefeaturescaninfluencetheuseandeffectofinformalpun- ishmentssuchassocialsanction.Inawidelycitedstudy,GneezyandRustichini(2000)foundthata fineforpickingupchildrenlateinakindergartenresultedinmoreparentspickinguptheirchildren late.Theyarguedthat“afineisaprice,”andthattheintroductionofafineshiftedthewayparents sawtheirbehavior:keepingyourchildinkindergartenafterclosinghourswentfrombeinganethical issuetobeingaserviceprovidedataprice.Theintroductionofthefineledtoa“crowdingout”ofthe ethicalincentives.WhilethestudydoesnotsupportSandel’sclaimthatpricesunderminemorality morethanfinesdo,statedbehaviorstudiedinBrekkeetal.(2003)indicatesthatpeopledorespond differentlytofines,whichareseenassymbolicallysupportinganobligation,thantheydotoprices, whichareseenasfaircompensationforaserviceavailableforpurchase.Itseemswellestablishedthat pricescanundermineamoralobligation(seeBowlesandPolania-Reyes(2012)forarecentsurveyof theliterature).

Viewedinthislight,thestrongreactionfromeconomiststhatSandeldescribesintheintroductory quotetothisarticlemayseemsurprising:textbooktreatmentsofpollutionineconomicsseepollution asexcessiveifitgeneratesmoreharmthanbenefits.Thisdefinitionofexcessiveseemsdifferentfrom Sandel’sinstrictnessmorethaninkind.Crowdingout,whilenotyetstandardtextbookmaterial,is thesubjectofalargeliterature,andwouldbeunlikelytomakeeconomistsfloodtheNewYorkTimes withletters.Sowhereisthedisagreement?Asweseeit,thedisagreementislikelyaboutconsequence ethicsversusvirtueethics.

WhenfirmAsellsapermittofirmB,AwillpollutelessandBmore,buttotalpollutionwillremain thesame.Sincebothfirmswanttotrade,theymustbothbebetteroff.Wethushavethesamepol- lution,lowercostsforbothfirmsandnodirectnegativeconsequences.Evaluatedontheseoutcomes tradeseemsunobjectionable.Sandel,ontheotherhand,isinspiredbyvirtueethics.Polluting,and henceharmingothers,isnotconsistentwithamoralcharacter.Aninstitutionthatservestolegitimize pollutionisthereforeitselfobjectionable,evenifpollutionlevelsremainthesame.³

OurquestionisnotwhetherSandelisrightinhismoralobjectiontoquotatrade,butwhetherasimi- larmoralobjectioncouldhelpexplainthewidespreadoppositiontotradableemissionquotaschemes:

areexperimentalparticipantsopposedtotradeintherighttodosomethingmorallywrongwhen thetradeisPareto-improvinginmonetaryoutcomes?Whilesurveysrevealsubstantialmoralobjec- tiontowardtradingofpollutionrights,attitudesmaybedifferentwhentheparticipantsthemselves experiencethedirectmonetarybeneﬁtsoftrade.

Asweseeit,themainmoralobjectionagainstCO₂emissionsisthatmarginalemissionsatcurrent levelsharmothersinexcessofwhatcanbejustiﬁedbyindividualgains.Inourexperiment,thiseffect wasreproducedbyaskinglabparticipantstochoosehowmany‘stickers’touse.Eachstickerused increasedtheirownpayoff,butinﬂictedamonetarylossontheirco-players,withthelossexceeding

3Forachallengetotheviewthatmarketsincarbondioxideemissionareobjectionablefromavirtueethicalperspective,see BruniandSugden(2013).

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theirprivatebeneﬁt⁴.Theprivatepayofffromsticker-usewasasymmetricwithinthegroupsoasto generategainsfromtradeinstickers.

Inthebaselineroundsparticipantsusedmostoftheirstickers,justaspeopleinpracticegenerate largeCO2-emissionsoutsidethelab.Next,weintroducedlimiteduse-rightsforthestickersalongwith anopportunitytotradeuser-rightswithinthegroup.“Burning”orretiringuse-rightswasexplicitly ruledouttoensurethattotalharmswerekeptconstant.Forthetreatmentgroups,thiswasframedas atradablerighttousestickers.Inthecontroltreatment,thiswasframedasanewandseparatetrading schemeinvolvinganewgoodthatdidnotimposeharmsonanyone(detailsgivenbelow).Formally, thetwogameswereequivalent,soanydifferencesshouldbeduetotheframing:tradingtheright toharmothersversustradingamorallyneutralgood.Beforethetradingschemewasintroduced, participantsinbothtreatmentandcontrolgroupswereaskedwhethertheythoughtthattrading shouldbeallowedornot.Afterparticipatingin10tradingrounds,participantsweregivenanactual votetodecidewhethertradingshouldbeallowedinaﬁnalround.

Oppositiontotradecouldbedisplayedinthreeways:(1)bystatingoppositiontotradeinasurvey questionbeforeexperiencingtrade,(2)bylimitingtheamountoftrade(andtherebyforegoingearn- ings),and(3)byvotingagainsttradeinaﬁnalroundwherethemajorityvotedeterminedwhether ornottradingwouldbeallowedintheﬁnalpartoftheexperiment.Ifparticipantsdidseeamoral objectiontotradingtherighttousestickersthatharmothers,wewouldexpectthemtovoteagainst tradebothinthepre-experiencehypotheticalvoteandinthepost-experiencerealvote.Wewould expectnoobjectionstotradeinthecontrolgroupswithtradeinamorallyneutralgood.Wewould alsoexpectthatmoralobjectionswouldshowupasreluctancetotradeinthetreatmentgroups,so thatfewerrightswouldbetradedinthetreatmentgroupscomparedtothecontrolgroups.

Theresultsshowednoobjectionstotradeinanyoftheseoutcomemeasuresforeitherthetreat- mentorcontrolgroups.Variousexplanationsoftheresultsarepossible:participantsmayhavefound theharminﬂictedonothersinsufﬁcientlyseveretoseestickeruseasmorallyobjectionable.Alter- natively,theymightnotseetradeinstickersaslegitimizingstickersuse.Totestthesehypotheses weranasurveyonAmazonMechanicalTurk.Theserespondentshadnotparticipatedintheoriginal experiment,butweregiventheinstructionsfromtheexperimentandaskedtoassesswhethersticker usewasmorallyobjectionable,andwhetheramarketinstickerswouldservetolegitimizesuchuse.

Respondentstendedtoagreeonbothpoints:stickerusewasamoralissue,andthemarketlegitimized stickeruse.

Anotherpossibilitycouldbethatourresearchparticipantsviewedmarketsmorefavorablythan most.Thisseemsimplausibleinlightofapostexperimentalsurveyonmoraljudgmentsofdifferent markets:oursubjectsstatedstrongmoralobjectionstoemissionquotatrade,ratingtheimmoralityof quotatradebetweentwoﬁrmsalmostashighasthatofmarketsinhumanorgansandsexualservices.

Insum,theresultsfromtheexperimentandthesurveysuggestthatthestickerdesignfulfilled bothpremisesofSandel’sargument,butwithoutthesefeaturestriggeringstrongoppositiontotrade instickers.Thisisconsistentwiththeeconomists’hypothesisthatoppositiontotradableemission quotasisduetoamisunderstandingofquotatradingsystems.Alternativeexplanations,however, cannotberuledoutandtheresultsshouldbeseenastentative:first,the“Turkers”whoevaluated themoralityofstickeruseandmarketswithoutdirectlyparticipatingintheexperimentwerealso askedcontrolquestionstotesttheirunderstandingoftheexperimentaldesign.Almostnonewere abletoanswerallquestionscorrectly,andremainingmisunderstandingsmayhaveinfluencedtheir moraljudgments.Second,totheextentthattheethicalnormsarespecifictotheactivityinvolved, thecaseforstrengtheningandprotectingnormsagainst“stickeruse”islikelytobeweakerthanthe caseforstrengtheningandprotectingnormsagainstexcessiveCO2emissions.Thatis,oursubjectmay sharetheviewthatCO2emissionisanactthatshouldbepenalized,butatthesametimefindsticker usewithintheexperimenttootrivialtowarrantstigmatizing.Ifthiswasthecase,Sandel’sargument againstmarketsthatlegitimizeimmoralactswouldnotapplyinthespecificcasestudied.Third,

4Formosttypesofemissions,theprivatebeneﬁtsexceedthesocialcostforlowlevelsofemissions.Bystandardeconomic arguments,emissionsaresociallyharmfulandpolicyinterventionsrequiredonlywhensocialcostsexceedprivatebeneﬁts.

Wehavethuschosentocalibratetheexperimentsuchthatthisisthecaseforallstickersused.

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theexperimentalinstructionsemphasizedthatsubjectsunderstoodthepayoffconsequencesoftheir action.Thismayspeciﬁcallytriggerconsequentialistmoraljudgment.Paxtonetal.(2011)documents thatworkingonmathematicalproblemsincreasestheprobabilityoflatermoraljudgmentsbeing consequentialist.Onethirdofourparticipantsarestudentsofmath,althoughrecruitedintheirﬁrst yearatuniversity,thisselectionofstudentsmaybeparticularlypronetoconsequentialistbehavior.

Inconclusion,whileourexperimentfailstoshowhowmoraloppositiontoquotatradearises,itdoes showthatsuchresistanceisnotanautomaticresponsetriggeredinanymarketthatinvolvestradein immoralgoods.

2. Othermoralobjectionstoquotatrade

Toavoidmisunderstanding,itisworthnotingthatourexperimentisnotintendedtotestwhether participantshavemoralobjectionstoquota-marketsingeneral.Ouraimistotesthowimportantand widelyheldaveryspeciﬁctypeofobjectionis.Tomakethispointcleareritmaybeusefultopointout someexamplesofalternativeobjectionsthatarenottestedinthisstudy.Inadditiontofeatureswhich arespeciﬁctoquotatradeasapolicyinstrument,therearealsootherethicalquestionsraisedbysuch tradingschemes.Theseconcernsmayinvolvetheamount,distributionandtimingofabatements,as wellasthedistributionofcosts(seefurtherdiscussionofsuchgeneralethicalissuesinthecontextof climatechangeinGardiner,2004).

WhiletradeinemissionquotasisPareto-improving,thegainsmaybeasymmetricallyshared.If sellersofquotasarepoorandthegainsprimarilygotorichbuyers,anobjectiontothetrademaybe thatitincreasesinequality.Ifthepricesaresufﬁcientlyfavorabletothepartythatisbestoff,theories ofinequalityaversionlikeFehrandSchmidt(1999)wouldpredictthatparticipantinthelabwould opposetrade.Cicconeetal.(2015)testsuchatradingschemeinthelabandﬁndthatparticipants areindeedreluctanttotradeatsetpricesthatstronglyfavortherich,evenifthetradeisPareto- improvinginmonetaryoutcomes.Thiscouldexplainobjectionstoemissionstradingifparticipants thinkthemarketpricewillfavorrichcountries.Itisunlikelytoberelevantinourexperiment,where pricesareendogenousandwouldshiftinresponse.

Otherobjectionstoemissionstradingaremorepragmaticandrelatedtospecificdesigndetails.One suchsub-optimalfeatureistheoftenexcessiveamountofquotasissued,bothintheKyotoProtocol andwithintheEUETStradingsystem.Thismakestheabatementgeneratedbythequotasystem limitedandinsufficient,andmaybeareasonforopposingspecificimplementationsofsuchpolicies.

AnotherfrequentlycriticizedfeatureoftheKyotoProtocolisitsCleanDevelopmentMechanism(CDM).

TheCDMraisesseveralproblematicincentiveeffectsandmayinfactincreaseemissionsratherthan stabilizingthemasintended(StrandandRosendahl,2012).Suchcriticism,whichwasalsoincluded inSandel’s1997op-ed,iscommonalsoamongsteconomists,butapplytoﬂawedimplementationsof thepolicyratherthantothe“intrinsic”moralityofquotatradeperse.

3. Experimentaldesign

TheexperimentconsistedofthreestageswhichareoutlinedinTable1.Stage1wasalinearcommon poolresourcegamewheretakingfromthecommonpoolresourcewasframedas“usingstickers.”

Byusingastickertheparticipantearnedaprivatepayoff,butatthesametimeimposednegative externalitiesonthethreeothergroupmembers.Theprivateearningsofstickerusewasasymmetric, inordertocreategainsfromtradeinstage2.Stage1oftheexperimentwasplayedfor10roundsand wasidenticalforbothcontrolandtreatmentsessions.

Instage2,thegroupsinthetreatmentsessionswereissuedalimitednumberofrightstouse stickers.Theserightsweretradableandcouldnotberetired(i.e.,the“quotas”couldnotbe“burnt”).

Thisdesignwaschosentoensurethattotalharmscouldnotbeinﬂuencedbyparticipants.Ifithad beenpossibletoretirestickers,however,“stronglymoral”participantswouldfacenewmoralissues regardingtrade:sellingastickeryouwouldnototherwiseusewouldruntheriskthatthebuyerwould usethesticker,increasingtotalharm.Thiswouldmakesalesmorallyproblematic.Alternatively,the

“stronglymoral”participantmightwanttopurchaseadditionalstickersinordertoretiretheseand reducetotalharmsfurther.Whilesuchmotivesareaninterestingissueinthemselves,theseeffects

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Table1

Overviewofthestagesintheexperiment.

Description Treatmentsessions Controlsessions

Stage1 Commonpoolresourcegame Identicalforbothtreatments (10rounds)

Withdrawalsfromthecommonpoolbyusing“stickers”,which areindividuallyproﬁtable(asymmetricallywithinthegroup) butharmothergroupmembers

Stage2 Tradegameexplained Hypotheticalquestion:should tradebeallowed?

Trade(10rounds)

Cap-andtradewithharmful stickers:limitedamountof userrightstotheharmful stickersareintroduced,which areopenfortradewithinthe group

Capandtradewithnew, non-harmfulstickers.Payoffs transformedtoequalthe payoffspertradeinthe treatmentgroupswithharmful stickers

Stage3 Voting:shouldtradebe allowedintheﬁnalround?

Finalroundwithendogenous rules

Caponuserrightsequalto stage2.Voteontradewith userrightsforharmfulstickers

Caponnon-harmfulstickers equaltostage2.Voteontrade withthenon-harmfulstickers.

Post-experimentsurvey

arenotpartofthediscussionwewantedtofocusoninthisexperimentasitisnotcentraltovirtue ethicalargument.

Asecondbeneﬁtofthe“noburningofstickers”rulewasthatitenabledustocreateaformally equivalentcontroltreatmentwithoutanexternalityframe:bymanipulatingthebaselineendow- mentandpayoffs,theexactsamepayoffstructurecouldbeframedastradeina“newgood”withno externalities.

Beforestage2wasimplemented,participantswereaskedahypotheticalquestionofwhetherthey thoughttradeshouldbeallowedornot.

Instage3,havingdirectlyexperiencedtrading, participantsvotedonwhetherornottoallow tradingofstickeruserrightsinaﬁnalround,andthemajorityvotewasimplemented.Thedifferent stagesareoutlinedindetailbelow.

3.1. Stage1–establishingthemorallysuspectgood

Toavoidhavingpriorattitudestowardenvironmentalorothergoodsinﬂuenceresults,anon- environmentalsettingwithapublicbad,labeledstickers,wasestablished.Ingroupsoffour,each groupmemberinitiallyreceived10stickers.Theirtaskwastodeterminehowmanystickers,R_i,to use.Foreachstickerused,theparticipantwouldgetaprivatepayoff,a_i,whilereducingthepayoffof eachremaininggroupmemberby10kroner.⁵ Participantswererandomlyassignedoneofthetwo types,differingonlyintheirprivatepayofffromstickeruse.Thelowproductivitytype,denotedas type1intheexperiment,earned5kronerperstickerused.Thehighproductivitytype,denotedtype 2,earned25kronerperstickerused.Inadditiontothestickers,eachparticipantwasgivenabaseline endowmentof150kronerinthebeginningofeachround.Payoffofparticipantiinoneroundwas determinedas:

_i=150+a_iR_i−10

j=/i

R_j with a_i=5 or 25

Notethatparticipantsofbothtypescouldearnnegativepayoffsinstage1.Thiswouldoccurifa participantusedfewstickerswhiletheremaininggroupmembersusedalot.Thelowproductivitytype wouldalsogetnegativepayoffifeveryone,includingthelowproductivitytype,usedalltheirstickers.

Theinstructionsemphasizedthatwhilepayoffsinstage1werepotentiallynegative,thepayoffsin laterstageswouldbesufﬁcientlypositivethattotalearningsfromparticipatingintheexperiment wouldnonethelessbepositive.

5Theexchangerateonthedayoftheexperimentwas1USdollar=5.54Norwegiankroner.

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Participantsplayed10roundsofthestage1game,andthisstagewasidenticalforbothtreatment andcontrolsessions.Theywereexplainedthattheirrealizedpayofffromstage1oftheexperiment wouldbethepayofffromoneofthetenrounds,determinedbyarandomdraw.

Aftereachround,participantsweregiveninformationontheirearnings(endowment+payofffrom ownstickeruse),howmuchtheywouldlosefromtheharmimposedonthembyothergroupmembers, andhowmuchtheywouldreceivenet,shouldthatparticularroundbedrawn.Thisinformationwas providedinordertoincreasetheprobabilityofamovetoanon-cooperativesolutionofthepublic goodgame,andtofurtherestablishthestickerasamorallysuspectgood.

3.2. Stage2(treatment)–establishingamarketforharmfulstickers

Afterstage1wascompleted,thetreatmentgroupsweretoldthattherighttousestickerswould nowbeconstrainedtoavoidexcessiveharms.Eachparticipantwouldbegivenanendowmentof 150kronerandtwo“rights”tousestickersperround.Theseuserightscouldbetradedwithinthe group.Retiringuserightswasnotpossible:eachparticipantwouldautomaticallyusetheirstickers.

Totalharmfromexternalitieswasthusﬁxed,and

i

Ri=8forallgroups.

Inthestage2game,theparticipant’sdecisionproblemwastodecideonthenumberofuserrights tobuyorsell.Whateverstickerstheypossessedattheendofthetradingroundwereautomatically used.

Thedoubleauctionmarketwasimplementedinawaythatensuredthatallrealizedtradeswould bePareto-improvinginmonetarypayoffs.Sincethetotalnumberofstickersusedinafourperson groupwouldalwaysbe8,

j=/i

R_j=8−R_i,wecanrewritethepayoffofparticipanti:

_i=150−80+(a_i+10)R_i−(R_i−2)p_R=70+(a_i+10−p_R)R_i+2p_R,

wherep_Risthetradingpricefortherighttousestickers.Aparticipantwitha_i=5willthusgainfrom sellingrightsatpricesof15kronerandabove,whilethosewitha_i=25willgainfrombuyingatprices of35kronerandbelow.Toensurethatnoparticipantsawtheirpayoffsreducedaftertrading,market priceswereconstrainedtolieintheintervalfrom15to35kroner.Themarketwasopenforoneand ahalfminutesineachround.

Inthemaintreatment,theinstructionsweredesignedtohighlighttheharmimposedonothersby stickeruse:usingaprintedtableandadetailedrun-throughofasingleexample,participantswere shownhowstickersaleswouldaffectpayoffsthroughmultiplechannels.Forinstance:ifasellersold arightfor15kroner,thesellerwould(i)receivetheagreedpriceof15kroner,butalso(ii)losethe revenuefromusingthestickerhim/herself(5kroner),andiii)lose10kronerduetotheincreasedharm theextrasticker-rightwouldallowthebuyertoimposeontheseller.

Beforetradestarted,participantswereaskedahypotheticalquestion:“Doyouthinkitshouldbe possibletotradetheuserrights?”

Asinstage1,stage2lastedfor10rounds–oneofwhichwasrandomlychosentodetermineactual payoffs.Aftereachround,participantswereinformedaboutthepayoffsthatwouldresultfromthis stageoftheexperimentifthepriorroundwasdrawn.Theinformationwaspresentedinamanner highlightingtheshiftingofharms,including:theparticipant’sgrossincome(endowmentandearnings fromanystickersoneheldattheendoftheround),thegrossloss(lossduetostickerusebyother groupmembers),andnetearnings.

3.3. Stage2(control)–establishingamarketfornon-harmfulstickers

Aftercompletingstage1participantsinthecontroltreatmentweretoldthatthenextstageof theexperimentwouldintroduceanewtypeofstickersthatimposednoharmonothers.Inactuality, thegamewasthesameasthatplayedbyparticipantsinthemaintreatment,butwithendowments andproductivitiesalteredto“hide”thesimilarity.Bymakingtheexternalityeffects invisibleand

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presentingnewprivateproductivities,thenewstickersappearedsubstantivelydifferentfromthe harmfulstickersencounteredinstage1.

Thelowproductivitytypenowearned15kronerpernewstickerusedandthehighproductivity typeearned35kronerperstickerused.Eachparticipantreceived2such“new”stickersinthebeginning ofeachround,andcouldtradethesewithintheirfour-persongroup.Thetradewasconductedinthe samedoubleauctionmarketasthetreatmentgroups,withpriceslimitedtotheintervalbetween15 and35kroner,inordertoensurethattradewasParetoimproving.

Inthisway,weensuredthatthegameplayedwasformallyequivalenttothatplayedbyparticipants inthemaintreatment.Thisimpliedanendowmentperparticipantof70kroner.Theresultingpayoff forparticipantiwasthen:

_i=70+(a_i+10)R_i−(R_i−2)pR=70+(a_i+10−pR)R_i+2pR

Beforetradestarted,participantswereaskedahypotheticalquestion:“Doyouthinkitshouldbe possibletotradethestickers?”

Asinstage1,stage2lastedfor10rounds–oneofwhichwasrandomlychosentodetermineactual payoffs.Aftereachround,participantswereinformedaboutthepayoffsthatwouldresultfromthis stageoftheexperimentifthatparticularroundwasdrawn.Theyreceivedinformationabouttheir netincome(endowmentandearningsfromanystickersusedandincome/expenditurefromtraded stickers),withnoreferencetoexternalitiesorharms.

3.4. Stage3–revealingattitudestowardmarket

Instage3oftheexperiment,participantsinbothtreatmentsweretoldthattheywouldplayone moreroundofthegametheyhadplayedinstage2,but thatthepresenceofamarketwouldbe decidedbyamajorityvote.Thequestionwasotherwiseidenticaltothatusedinthe“hypothetical”

voteconductedpriortostage2.

Aftercastingtheirvote,thelastroundwasruninaccordancewiththemajoritydecisionofthe session.Stage3consistedofonlyoneround,withthechoicesmadeinthatrounddeterminingthe payoffs.Aftertheround,participantsweregiveninformationontheirstage3payoffs.Theywerealso toldwhichofthestage1andstage2roundsthatwoulddeterminetheirrealizedpayoffsfromthose stages,inadditiontothetotalpayoffearnedfromtheexperimentasawhole.Thisinformationwas followedbyashortpost-experimentsurvey.

4. Results

Participantswererecruitedfromlargeundergraduateclassesinmathematics⁶andassignedtotwo experimentalsessionsheldback-to-backonFriday,September9th,2011.Therewere24participants inthetreatmentsession(6groups)and20participantsinthecontrolsession(5groups).Attherequest ofoneofthereferees,anadditionalfoursessionswereheldback-to-backonTuesday,March25th, 2014inordertoincreasestatisticalpower(seeSection5).Theseparticipantswererecruitedfrom classesinthephilosophyofscience,mandatorytoallstudentsattheUniversityofOslo.Therewere40 participantsinthenewtreatmentsessions(10groups)and40participantsinthenewcontrolsessions (10groups).Intotal:64participants(16groups)intreatmentsessionsand60participants(15groups) incontrolsessions.

4.1. StageI:extensivestickeruseinthecommonpoolresourcegame

Onaverageoverthe10 rounds,70%ofallstickerswereused,withsomegroupheterogeneity.

Calculating,foreach groupseparately,theaverageshareofstickersusedover the10rounds,the shareusedvariedbetweengroupsfromaminimumof26.3%tomaximumof95.5%.Therewereno systematicdifferencesingroupstickerusebycontrolandtreatmentsessions(seeFig.1).Usinga

6Thesearestudentswhoplantoproceedwithmath,computerscienceornaturalsciences.

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020406080100Percent of stickers used

0 2 4 6 8 10

Period

Treatment Control

Fig.1.StickersusebyperiodandtreatmentinStage1.

t-testatthegrouplevel:calculatingthemeanstickeruseinthefirstfiveandlastfiveperiodsforeach groupseparately,wefoundnosignificantdifferencesbetweentreatmentandcontrolgroupsineither setofperiods.Inthefirstfiveperiods,treatment-groupsusedanaverageof66.7%oftheirstickers against64.6%inthecontrolgroups(p-value=0.7).Inthelastfiveperiods,thenumberswere70.7%

fortreatmentand77.4%forcontrolgroups(p-value=0.27).

Inthe10roundsofstage1,averagestickeruseincreasedfrom58%inthefirstroundto80%inthe last.Aregressionofgroup-levelsticker-useontheround-number(withgroupfixedeffects)givesa statisticallysignificantpositivetrendof1.8percentagepointsperround(p<0.01).

Onaverageacrossthe10rounds,lowproductivityplayersused1.2fewerstickersthanhighpro- ductivityplayers(p=0.01).Recallthatwhileallparticipantsimposedalossof30kronerontheother membersofthegroupforeachstickertheyused,theprivatepayoffsforimposingthisharmwasonly 5kronerperstickerforlowearnersascomparedto25kronerforhighearners.Ifallthemembersin agroupused7stickerseach,thehighproductivitymemberswouldearn105kronerwhilethelow productivitymemberswouldlose35kroner.Ifnooneinthegroupusedstickers,eachmember’snet payoffwouldequaltheendowmentof140kronerandthiswouldclearlybeaParetoimprovement.

4.2. Stage2:nodifferenceinmarketattitudesbetweenthetreatmentandthecontrol

Acaponstickeruseequaltotwostickersperpersongivesapayoffof90and130(tolowandhigh productivitytyperespectively),andisthusaParetoimprovementrelativetothe“laissezfaire”sticker useinstage1oftheexperiment.Theresultsfromstage2areshowninTable2.

Participantswerefirstaskedtovotehypotheticallyfororagainsttrade,giventhecaponsticker- useperplayer.Inthetreatmentsessions80%oftheparticipantssupportedtradeinthehypothetical vote,while83%ofthecontrolsessionsparticipantsdidthesame.Thedifferencewasnotsignificant (p=0.61).However,whenwelookattheseparatetypesinthetreatmentsessionsonly,weseethatthe lowproductivitytypesaresignificantlymorenegativetotradethanthehighproductivitytypesinthis pre-experiencehypotheticalvote(69%oflowproductivitytypesversus91%ofhighproductivitytypes opposetradeinthetreatmentsession,p=0.03).Thisdifferenceisnotfoundinthecontrolsessions.Low productivitytypesinthetreatmentsessionsarealsomorereluctanttotradeinthispre-experience votethanlowproductivitytypesinthecontrolsessions(aweaklysignificantdifference,p=0.09).

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Table2

Marketattitudesinstage2andstage3oftheexperiment.

Treatment Control t-test

Pre-experiencehypotheticalvote 80%(n=64) 83%(n=60) p=0.61

%infavoroftrade(n)

Lowproductivitytypes 69%(n=32) 87%(n=30) p=0.09

Highproductivitytypes 91%(n=32) 80%(n=30) p=0.24

Realizedtrade 93%(n=16) 88%(n=15) p=0.13

In%ofpossibletrades

Averageprice 27.8kroner(n=16) 26.9kroner(n=15) p=0.42

Price(n)

Post-experiencerealvote 64%(n=64) 77%(n=60) p=0.13

%infavoroftrade(n)

Lowproductivitytypes 72%(n=32) 87%(n=30) p=0.16

Highproductivitytypes 56%(n=32) 67%(n=30) p=0.41

Inthetreatmentsessions,93%ofalluserrightsweretraded,withanaveragepriceof27.8kroner perright.Asapriceof25kronerwouldgiveequalgainstobothplayers,anaverageof27.8kroner issomewhatskewedinfavorofthelowproductivitytypes(sellers)whowerealsoworseoffbefore trade.Inthecontrolsessions,88%ofallstickersweretraded,withanaveragepriceof26.9kroner.

Therewasnosigniﬁcantdifferenceintheamountofrealizedtradesortheaveragepricesbetweenthe treatmentandcontrol.

4.3. Stage3:nodifferenceinvotingbehaviorbetweenthetreatmentandthecontrol

Finally,whenactuallyvotingover trade,thesupportfortradewasstill substantial.64%voted infavoroftradeinthetreatmentsessions,while77%votedfortradeinthecontrolsession.While weexpectedthecontrolgrouptohavefewermoralobjectionstotrade,theoveralldifferencewas notsignificant(p=0.13).Comparingthepost-experiencevotewiththepre-experiencehypothetical vote,thesupportfortradeisrelativelyconstantamongthelowproductivitytypesbuthasfallen considerablyamongthehighproductivitytypes.Inthetreatmentsessions,thesupportfortradeamong highproductivitytypesfellfrom91%to56%,asignificantreduction(p=0.0015).Thesupportfortrade amonghighproductivitytypesfellinthecontrolsessionsaswell,howevernotsignificantly.

Apossiblereasonwhythesupportfortradefellisthatittooktimeinthelab.Aseachmarketwas openfor90s,10tradingroundstookatleast15min.Subjectseagertoleavethelabmaythushave votedagainstmoretrading.Actually,thelaststagehadonlyonetradinground,butthismaynothave beensufﬁcientlyclearfromtheinstructions.

4.4. Potentialreasonsfornomarketopposition

Theresultsfailtosupportthehypothesisthatparticipantsresisttradebecausethiswouldlegitimize anobjectionableaction.ThisdoesnotinanywayundermineSandel’smoralargument,butitdoesshow thatanobjectionalongthelinesofhisargumentisnottriggeredinthisspeciﬁcexperimentalsetting.

Thereareseveralpossiblereasonsforthis,someofwhichcanberuledout.

4.5. Havewerecruitedpro-tradeparticipants?

Onepossiblereasonwhyourparticipantsaresopositivetotradecouldbethatwerecruitedapar- ticularlypro-tradesample.Whilewetookcarenottorecruitamongeconomicsstudentstoavoidthe doctrinalthinkingSandelclaimscharacterizeseconomists,onethirdofoursamplewasrecruitedfrom mathematicsstudents,whomayalsoholdparticularlyfavorableviewofmarkets.Apost-experimental surveyelicitedparticipants’attitudestowardanumberofmorallyquestionablerealworldmarkets.

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0 20 40 60 0 20 40 60 Unsure

Morally acceptable Immoral in principle Highly immoral

Unsure Morally acceptable Immoral in principle Highly immoral

Body parts Emission rights for firms

Emission rights for nations Food from countries with famine

Goods from low wage countries Sexual services

percent

Fig.2.Post-experimentattitudestowardmarkets,bothsessions(n=124).

Thesampleexhibitsattitudestowardmarketsthatare,toeconomists,ratherastonishingintheir anti-tradesentiments.

Theattitudestowardspeciﬁcmarketswereelicitedbythisquestion:

Foreachofthefollowingareas,towhatextentdoyouthinkthatitismorallyacceptabletotrade inthesegoods/servicesformoney?1-Veryimmoral,2-Inprincipleimmoral,butacceptablein somecases,3-Morallyacceptable,4-Don’tknow.

Thegoods/serviceswere:(a)Bodyparts,(b)Sexualservices,(c)Emissionsrightsforﬁrms,(d) Emissionsrightsfornations,(e)Goodsproducedinpoorcountriesbyworkersonaverylowsalary,(f) Foodfromcountrieswherealargeshareofthepopulationissufferingfromhungerandmalnutrition.

TheresultsforallsessionscombinedareshowninFig.2.Allthemarketsarejudgedtobeimmoral byavastmajorityofparticipants,andMannWhitneytestsrevealednosigniﬁcantdifferencesbetween thetreatmentandcontrolsessionsintheirpost-experimentattitudestosuchmarkets.Fig.3shows theresponsedistributionsforcontrolandtreatmentsessionsseparately.

4.6. Statisticalpower

Ourexperimentisanattempttoexaminewhetherthevirtueethicalreasoningdiscussedabove canexplainthewidespreadoppositiontoquota-trade.Wearguethatthisisnotthecase,asweﬁnd nosigniﬁcantdifferencebetweenthedifferenttreatments.Weinitiallyreachedthisconclusionafter runningtheexperimenton44participantsinSeptember2011.Arefereesuggestedthatthissample mightbetoosmalltoidentifyaneffect,andrecommendedapoweranalysisandfurthersessionsto increasethenumberofparticipants.

OurresearchquestionwaswhetherSandel’smoralargumentcouldexplainasubstantialshare oftheopposition toquota trade.As notedabove, a nationallyrepresentativesample found46%

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a) Control (n=60)

b) Treatment (n= 64)

0 20 40 60 0 20 40 60

percent

0 20 40 60 0 20 40 60

percent

Fig.3.Post-experimentattitudestowardmarkets,bytreatment.

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ofthepopulationopposingtradableemissionquotas.Oppositionamongstourparticipantsseems evenhigher:tradingof emissionrights betweennations wasjudged as“highly immoral” in the post-experiment survey by 36%, with an additional 37% seeing it as immoral in principle–but acceptableinsomecases.Thustheoppositioninoursubjectpoolintherange36–73%.Counting atleastafractionofthosewhoanswered“immoralinprinciple”asopposingemissionrightstrade, theoppositionseemstobeatleastashighasthe46%inthenationalsample.Ifvirtueethicsisan importantexplanationofthisopposition,wewouldthinkthatitshouldaccountforatleast15–20 percentagepointsofthetradeopposition.Wewouldthuswantasamplesizeinwhichwewould withhighprobabilitydetecta20%treatmenteffect,andwithconsiderableprobabilityalsodetecta 10%treatmenteffect.Aneffectoflessthan10%wouldbeoflimitedinterest.

Underthenullhypothesis,oppositiontotradeisthesameinbothtreatmentandcontrolgroups.

Basedonthe2011sessionswith44participantsthisgivesusan11%baselineopposition(10%vote againsttradeinthecontrolsessionand12.5%voteagainsttradeinthetreatmentsession).Asdiscussed abovesubjectsmayhaveobjectedtotradetosavetimeinthelab,oritmayreﬂectallkindsofopposition totrade.Evenifweassumethatthisoppositionrevealedbyvotinginoursampleisnotrelatedto Sandel’sargumentand subtractthisoppositionfromthe46%oppositionwewanttoexplain,this leavesuswith35percentagepointsofthesampleopposingtradeforreasonsthatmayberelatedto Sandel’sargument.The20%and10%benchmarksremainreasonableinlightofthis.

Whatistheprobabilitythatwewouldrejectthenullhypothesisatconventionalsigniﬁcancelevels ifthetrueaverageeffectofthetreatmentisa10or20percentagepointincreaseintradeopposition?

Sincethemeanofabinomialdistributionisapproximatelynormal,theprobabilitythatthemeans willbeatleastt*standarddeviationsapartcanbeshowntobeapproximately˚

_p−q

−t∗

where pistheoppositiontotradeinthetreatmentgroupandqtheoppositioninthecontrolgroup.The standarddeviationisafunctionofthenumberofobservationsandtheprobabilities.(Weignore theprobabilityoffalselyfindingsignificantlymoreoppositioninthecontrolgroup.)Followingthe traditionofusingthestrictertwosidedtestevenwithaonesidedhypothesis,therelevantthreshold fora10%significancetestist*=1.645..

Toreachapowerof⁷80%ifthetrueeffectis20%wewouldneed28moreobservationsinboth controlandtreatment.Werantwonewsessionsadding40subjectsinbothcontrolandtreatment.

Thepoweris88%whenusingtheinitialbaserate,butthegeneraloppositiontotradewashigherinthe lastsessions,⁸reducingthepowerto84%,butstillabovethestandard80%threshold.Withasmaller trueeffectof10%wewouldgetasignificanteffectwith45%probability.Itwouldtakeasamplesize ofmorethan200ineachgrouptoreachapowerof80%inthiscase.Wecanthusberatherconfident thatiftherewasastrongeffectwewouldfindit,whilewithasmalltrueeffect(10%)wemayhave failedtofinditjustbybadluck.

4.7. Externalassessmentofmoralityofexperimentalchoices

Sandel’sargumenthastwopremises:anactivityXisimmoral,andtradelegitimizestheuseofthe tradedgoodsorservices.Onereasonforourlackingresultscouldbethatstickeruseintheﬁrstpart oftheexperimentwasnotseenasimmoral.

Totestthispossibility,weconductedasurveyonAmazonMechanicalTurk.Thisisanonline“labor market”whereindividualsfromaroundtheworlddoshort,simple,web-basedtasksforrealmoney.

The“Turkers”werepresentedwithanEnglishtranslationoftheexperimentalinstructions,somewhat simpliﬁedasthemechanicsandimplementationofthedoubleauctiontradewereirrelevantforthe question.Theynexthadtoanswercomprehensiontests(withmonetaryincentivesforcorrectunder- standing).Finally,theywereaskedtoevaluatethemoralityofstickeruseintheﬁrstpart,andforthe secondpartoftheexperiment,toevaluatethemoralitybothofestablishingamarket,andoftrading inthemarket.56personsansweredthesurveywhichwasconductedonJune1st2012.

7The80%thresholdisconsideredstandardintheliterature.Seee.g.Bellemareetal.(2014)whoalsoﬁndthattherequired samplesizegreatlyexceedssizesusedintheexperimentaleconomicsliterature.

8Thatisbasedontheinitialresultsweusep=0.31andq=0.11,whiletheupdatedoppositionwouldimplyp=0.38and q=0.18witha20%effect.

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Table3

SurveyattitudestowardstickeruseintheexperimentfromMechanicalTurk.

Moral Neutral Immoral

Stickerusebythelowearningtype 29% 29% 43%

Stickerusebythehighearningtype 41% 30% 29%

Allowamarketforstickeruse 35% 21% 43%

Buysticker-userights 36% 37% 27%

Sellsticker-userights 32% 30% 38%

Disagree Neutral Agree

Marketwillmakestickeruseseemmoremoral 20% 30% 50%

Therespondentsclaimedtoseetheexperimentalchoicesasmorallyrelevant.Moreparticipants respondedthatstickersusewasimmoralthanthosewhorespondedthatitwasmoral.Theresults arepresentedinTable3.Notethatthecategories“stronglymoral”and“somewhatmoral”havebeen merged,andsimilarlythecategories“stronglyimmoral”and“somewhatimmoral”.

AconsiderableshareoftheTurkersthusconsideredsticker-usetobeimmoral,andsawmarketsin userrightsasunderminingthis.Turkersalsoansweredthesamequestionsregardingthemoralityof theparticularmarketsfromthepost-experimentalsurvey.Inthesequestions,theTurkersexpressed lessanti-tradeattitudesthantheexperimentalparticipants.Thissupportsthepreviousconclusion thatourexperimentalsamplewasnotgenerallymorepro-tradethanothers.

Still,wehaveseveralcaveatsabouttheresponsesfromMechanicalTurk.First,withnoincentives toanswertruthfully,randomresponsescannotberuledout.Theanswersareindeedratherevenly distributedwithastrongeremphasisonthemiddlealternatives,asimilarpatterntowhatrandom responseswouldproduce.Note,however,thatthedifferentassessmentsofstickersusebyhighand lowearnersmakegoodsense.Thereisastrongertendencytoagreetotheclaimthatmarketscan legitimizeanaction,whichisalsoconsistentwiththeﬁndingsoncrowdingoutintheeconomics literature.

Moreover,themajorityofrespondentswereunabletoanswerallcomprehensionquestionscor- rectly.Probablythisispartlyduetocomplicatedinstructions,lackofpracticalexperiencewiththe experiment(asopposedtotheparticipantsintheexperiment)andinsufﬁcienttimeusedbyTurkers toreadinstructions.AlthoughTurkersweregivenabonusifallcomprehensiontestswerecorrectly answered,theydidnothavethesameincentivestothoroughlyunderstandtheinstructionsaspartic- ipantsintheexperiment.ParticipatingTurkersonaveragespentnearly17minonthesurvey,which shouldbeenoughtimetoread the2 pagesofinstructions thoroughly,answer7 comprehension testsandanswer6ethicaljudgments.Sincethisisonlytheaverage,alargesharemayhaveused considerablylesstimeandhencemisunderstood.

5. Discussionandconclusion

Our experimentdoesnot supportthehypothesisthat peopleopposetrade inimmoral goods becausemarketslegitimizeactionsthatdeservetobestigmatized.Thisdoesnotimplythatsucha moralargumentisinvalid,onlythatourexperimentalparticipantsdidnotapplythislogicinthisspe- ciﬁccontext.Theresultsshowthatmoraloppositionisnotnecessarilygeneratedinmarketstrading immoralgoods.However,aswithanynon-resultthelackofresultcouldbeduetopoorexperimental design.Whilewehavetriedtotestforsomeofthepossibleproblemsthatcouldarise,wemayhave overlookedothers.

Onereviewerpointoutthat“peopleoftenview(perhapsincorrectly)pollutionasbeingdoneby

“others”(ﬁrms)andvictimsas“us”whereasin[our]experimenteveryoneisbothvictimandpolluter.”

Inthelabthiscouldcorrespondtohavingtheexternalityhitsomepassiveparticipantspossiblyin anotherroom.Whileaneconomist’sresponsetothisclaimwouldbethattheexternalityisunaffected bythetrade,wecannotruleoutthatitwouldhaveanimpactonhowsubjectsassessthemoralstanding oftradeinthegivensetting.Cicconeetal.(2015)doﬁndthatdistributionalimpactoftradematters,

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andoursubjectsarenegativetobuyinginexpensivegoodsproducedbylow-paidworkers.Still,as Turkersfoundthestickersusewronginourcasetoo,wedoubtthatthisistheessentialelementof themoralevaluation.

Adifferentcounterargumentwouldbethatcheck-matingyouropponentinagameofchessis moral,eventhoughitimposesalossonyouropponent.Theexperimentmaysimilarlybeviewedby participantsasagametobe“won.”Withsuchamindset,stickerusemaynotbeseenasmorallywrong.

This,however,shouldthenapplytomanyexperimentsonmoralbehavior.Inourcase,itwouldimply thatparticipantswillactasiftheydonothaveanymoralobjectionstoamarketintherighttodo wrong,whileoutsidetheexperimentalcontexttheydo.TheassessmentoftheTurkers,however,is moreconsistentwithstickerusebeingmorallywrong,evenwithinthecontextoftheexperiment.

Anotherpossibility,relatedtothedifferentmindsettriggeredintheﬁeldandintheexperiment, is that experiments in economics “train” participants to focus on consequences. By highlight- ingandfocusing onconsequences,theset-upand instructions mayprimefor aconsequentialist ethic.Theargumentthattradelegitimizesmorallyobjectionablebehaviorseemstobuildonnon- consequentialistethics:theintention(tobemoral)isimportantinitself,independentlyofthebehavior itgenerates.Ifso,preciseinstructionsandtrainingroundstoteachpayoffconsequencesmaytem- porarilyeraseorweakenthereasoningthatordinarilydrivesjudgmentsofmarkets.

Acknowledgement

We aregratefultoparticipantsattheNorwegianAnnualMeetingforEconomists2012,tothe Editorandtwoanonymousrefereesforhelpfulcommentsandsuggestions.Wearefurthergrateful totheResearchCouncilofNorwayforfundingthroughtheMiljø2015programandproject193703 –Improvinginternationalcooperationonemissionabatement.BrekkeandRogebergareassociated withandtheprojectispartlyﬁnancedbyCREE–theOsloCentreforResearchonEnvironmentally FriendlyEnergy–whichissupportedbytheResearchCouncilofNorway(Grantnumber209698).

BrekkealsoacknowledgethesupportoftheCentreforEquality,SocialOrganizationandPerformance (ESOP).

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