Tuesday, May 4, 2010

Moral judgments about economic transactions: Luke Coffman

Lucas (Luke) Coffman defended his dissertation yesterday. He's an eclectic experimenter, and one of his papers looks at the assignment of credit or blame, and how that is influenced by the presence of intermediaries. For example (to pick a Harvard-centric one), is Harvard viewed differently if it hires janitors directly at a low wage than if it contracts with a janitorial services company that employs the janitors?

The baseline condition of one of his experiments is easy to describe: one participant (who you can think of as Harvard) is endowed with $10, which he can divide with a second participant (who you can think of as a janitor), or instead can sell the right to divide the $10 to a third participant (who you can think of as the janitorial services company). Luke then elicits a judgment of the transaction from a fourth party, who is able to punish the first party by reducing his payoff. The results are clear: for a given (low) amount delivered to the “janitor,” punishments are considerably reduced if it is delivered indirectly, through a third party, rather than directly.

Luke designed and conducted many careful controls to better understand what is going on, and rule out plausible alternative hypotheses. (For one thing, choosing to use an intermediary doesn’t seem to fool anyone; people correctly anticipate that using an intermediary will be bad for the lowest paid member of the group, but they nevertheless find it less blameworthy.) One way to think about his results is that they suggest that fairness judgments may be very narrowly framed, and confined more than we had any reason to suspect to very direct interactions, so that intermediated interactions are judged differently than direct interactions.

Luke will be an assistant professor of economics at The Ohio State University next year.

Welcome to the club, Luke.


Michael Giberson said...

Generally seems consistent with moral judgments in the various trolley car scenarios. Physically pushing a person onto the track resulting in one death that saves five others is typically seen as more morally objectionable than pushing a button or throwing a switch that causes a person to fall onto the track resulting in one death to save five others.

The intermediary in the janitor hiring transaction provides some insulation from moral judgment since the connection is less direct. I suspect the result would hold even if the principle dictated the terms that the intermediary could offer to the janitor, though likely not as strong as without the dictated terms. Sounds like good work.

Michael Giberson said...

Actually looking at Coffman's job market paper shows that (no real surprise) he discusses the trolley case.