In this article we report the findings of a randomised control clinical trial that assessed the impact of a Philosophy for Children program and replicated a previous study conducted in Scotland by Topping and Trickey. A Cognitive Abilities Test was administered as a pretest and a posttest to randomly selected experimental groups and control groups. The students in the experimental group engaged in philosophy lessons in a setting of structured, collaborative inquiry in their language arts classes for one hour per (...) week for a number of weeks. The control group received the standard language arts curriculum in that one hour. The study found that the seventh grade students who had experienced the P4C program showed significant gains relative to those in the seventh grade control group at a high level of statistical significance, but the eighth grade students in the experimental group did not show such gains over the eighth grade control group. It was discovered that the seventh grade teachers started the program early in the school year and continued it for a period of 22 to 26 weeks, while the eighth grade teachers started much later and used the program for only 4 to 10 weeks. Our findings suggest that the P4C program must involve students in activities for a significant period of time before the program shows results, but that a meaningful impact on students’ cognitive abilities can be achieved in about 24 weeks of lessons, less than half the time evidenced by the study by Topping and Trickey. (shrink)

Three recent research reports by Topping and Trickey, by Fair and colleagues, and by Gorard, Siddiqui and Huat See have produced data that support the conclusion that a Philosophy for Children program of one-hour-per-week structured discussions has a marked positive impact on students. This article presents data from a follow up study done three years after the completion of the study reported in Fair et al.. The data show that the positive gains in scores on the Cognitive Abilities Test were (...) still present and had not faded after three years. Given the strength of these confirmations of the positive durable impact of the P4C program of structured discussions and given the relatively low cost of implementing the P4C program, it is recommended that it become a standard part of the school curriculum. (shrink)

Three recent research reports by Topping and Trickey, by Fair and colleagues, and by Gorard, Siddiqui and Huat See have produced data that support the conclusion that a Philosophy for Children program of one-hour-per-week structured discussions has a marked positive impact on students. This article presents data from a follow up study done three years after the completion of the study reported in Fair et al.. The data show that the positive gains in scores on the Cognitive Abilities Test were (...) still present and had not faded after three years. Given the strength of these confirmations of the positive durable impact of the P4C program of structured discussions and given the relatively low cost of implementing the P4C program, it is recommended that it become a standard part of the school curriculum. (shrink)

Three recent research reports by Topping and Trickey, by Fair and colleagues, and by Gorard, Siddiqui and Huat See have produced data that support the conclusion that a Philosophy for Children program of one-hour-per-week structured discussions has a marked positive impact on students. This article presents data from a follow up study done three years after the completion of the study reported in Fair et al.. The data show that the positive gains in scores on the Cognitive Abilities Test were (...) still present and had not faded after three years. Given the strength of these confirmations of the positive durable impact of the P4C program of structured discussions and given the relatively low cost of implementing the P4C program, it is recommended that it become a standard part of the school curriculum. (shrink)

Times of crisis bring about increased demands on businesses as shortages, or unexpected but significant, business costs are encountered. Passing on such costs to consumers is a challenge. When faced with a retail price increase, consumers may rely on cues as to the motive behind the increase. Such cues can raise suspicion of alternative motive (e. g., taking advantage of the consumer) affecting consumers' judgments of price fairness. This research investigates two triggers of suspicion: salience of alternative (...) motives, and behavior judged to be out-of-character for the business. Results of the two studies within crisis contexts indicate that suspicion is created when alternative motives are salient and when a retailer acts out-of-character. Multiple group analyses revealed that suspicion induced negative affect and subsequent perceptions of price fairness. When suspicion was present, more negative feelings toward the retailer and judgments of price unfairness resulted. (shrink)

This article researches factors that influence price fairness judgments. The empirical literature suggests several factors: reference prices, the costs of the seller, a self-interest bias, and the perceived motive of sellers. Using a Dutch sample, we find empirical evidence that these factors significantly affect perceptions of fair prices. In addition, we find that the perceived fairness of prices is also influenced by other distributional concerns that are independent of the transaction. In particular, price increases are judged (...) to be fairer if they benefit poor people or small organizations rather than rich people or big organizations. (shrink)

The present research isolates the fairness assessment of the process used by the retailer to set a price, as well as the distributive fairness of the price compared to the price that others are offered, and examines the combined effect of procedural fairness and distributive fairness on overall price fairness. Two experimental studies examine procedural and distributive fairness effects on overall price fairness. In study 1, procedural fairness (...) and distributive fairness are manipulated and found to interact to bring about overall price fairness. In study 2, suspicion toward the seller is found to mediate the relationship between procedural fairness and overall price fairness when the price is disadvantageous. (shrink)

The most common solutions to the problem of high pharmaceutical prices have taken the form of regulations, price negotiations, or changes in drug coverage by insurers. These measures for the most part transfer the burden of drug expenditures between pharmaceutical companies and payers or between payers. The aim of this study is to propose an alternative model for the relationship between the main stakeholders involved in the price setting and purchasing of pharmaceuticals, one that encourages a more cooperative (...) approach. We draw from principles of ethics and health economics and apply them to the context of the pharmaceutical industry. The model prioritises two objectives, to make drugs financially accessible to the patients who need them, and to keep pharmaceutical companies viable and profitable. It is centered around the sharing of financial risk between the main stakeholders, which we describe as ‘enlightened risk sharing’. After establishing the foundations of this model, we expand on the type of policies that can follow these principles with current day examples. (shrink)

This paper researches perceptions of the concept of price fairness in the Dutch coffee market. We distinguish four alternative standards of fair prices based on egalitarian, basic rights, capitalistic and libertarian approaches. We investigate which standards are guiding the perceptions of price fairness of citizens and coffee trade organizations. We find that there is a divergence in views between citizens and key players in the coffee market. Whereas citizens support the concept of fairness derived from (...) the basic rights approach, holding that the price should provide coffee farmers with a minimum level of subsistence, representatives of Dutch coffee traders hold the capitalistic view that the free world market price is fair. (shrink)

In ordinary life everyone assumes that he has a great deal of knowledge about other minds or persons. This assumption has naturally aroused the curiosity of philosophers; though perhaps they have not been as curious about it as they ought to have been, for they have devoted many volumes to our consciousness of the material world, but very few to our consciousness of one another. It was thought at one time that each of us derives his knowledge of other minds (...) from the observation of other human organisms. I observe that there are a number of bodies which resemble my own fairly closely in their shape, size, and manner of movement; I conclude by analogy that each of these bodies is animated by a. (shrink)

Recently, dramatic price increases by several pharmaceutical companies have provoked public outrage. These scandals raise questions both about how pharmaceutical firms should be regulated and about how pharmaceutical executives ethically ought to make pricing decisions when drug prices are largely unregulated. Though there is an extensive literature on the regulatory question, the ethical question has been largely unexplored. This article defends a Kantian approach to the ethics of pharmaceutical pricing in an unregulated market. To the extent possible, pharmaceutical companies (...) must price drugs so that those who genuinely need them can get them without financial ruin. This requirement is an ethical side constraint, like the moral prohibitions on deception and theft, that takes precedence over a business’s interest in maximizing profit. That said, the requirement’s application is sensitive to the need to recoup the costs of research and to produce a return that financially justifies the original investment. It may not be either feasible or desirable for government to attempt to enforce the ethical requirements concerning just pharmaceutical pricing. Either price regulation or subsidy could fulfill government’s obligation to protect patients from being objectionably vulnerable to pricing decisions by private companies. (shrink)

Abstract:Our research investigated pricing policies of fast-food restaurants in predominantly black neighborhoods. We argue that the lack of monitoring of franchisees’ pricing policies leads to higher prices. Results indicate that franchisees are significantly more likely than company-owned outlets to charge higher prices based on the proportion of blacks in a neighborhood. These price differences do not appear to be explained away by cost or competition factors. Our findings do not establish an intent to discriminate; nevertheless, we discuss the (...) class='Hi'>fairness of the pricing structure found. (shrink)

John Broome and Duncan Foley have proposed an ingenious way to transfer benefits backwards in time, from people who are not here yet to people who will not be here in the future. Present people can crowd out conventional, and often brown, investments by issuing global climate bonds (GCBs). The debate about GCBs has focused on whether it is justified to use this financial instrument to allow future people to buy off present people for climate mitigation. In this article, I (...) ask whether it is fair to use GCBs to share the cost of a global carbon price between present and future people. My answer is that it depends on the approach used to calculate the carbon price and, of course, on the normative claims underlying the different approaches. Specifically, I argue that the internalisation principle underlying the cost-benefit approach does not justify intergenerational cost-shifting if, as in most cases, the social cost of carbon is determined using, inter alia, a social discount rate. Instead, the conservative justifications underlying a cost-effective carbon price consistent with the Paris mitigation target allow for intergenerational cost-shifting, but only to the extent of the difference (if any) between the Paris-consistent and the Pareto-efficient carbon price. (shrink)

Fair competition law and public health law talk past each other when discussing pharmaceutical pricing and distribution. The former cannot agree on the relevant definition of consumer welfare. The latter does not fully comprehend the highly complex but inherently collective nature of pharmaceutical drug acquisition in the United States. This essay proposes to inject public health discourse into this debate to enrich it, focus it, and render it more accessible to those who must live by its outcome.

This paper uses John Rawls' theory of justice to defend the patent system against charges that it has an unfair effect on access to medications, from the perspective of national and international justice. The paper argues that the patent system is fair in a national context because it respects intellectual property rights and it benefits the least advantaged members of society by providing incentives for inventors, investors, and entrepreneurs. The paper also argues that the patent system is fair in an (...) international context, provided that developed nations take steps to help disease-stricken countries secure internal justice. Fairness in a national or international context also requires that the patent system should include emergency exceptions to deal with short-term inequities. (shrink)

This article contributes to scholarly understanding of the significance of procedural fairness in pricing contexts. It has been widely recognized that price fairness judgments concern both the outcome (fair price) and the procedure leading to the outcome (fair pricing). However, extant research has traditionally viewed procedural fairness as a means to outcome fairness. According to this instrumental view, procedural fairness is a component or antecedent of outcome fairness, but has no direct effects (...) on consumers’ responses to prices. Building on the relational perspective on fairness, we develop and test a model of price procedural fairness as an end in itself. In three lab studies, we show that (1) when information regarding outcome (an unfavorable price difference) and procedure (the pricing practice underlying the price difference) is available simultaneously and unambiguously, procedural fairness has direct and stronger effects than outcome fairness on consumers’ responses and (2) procedural fairness mediates the effects of pricing practices on these responses. In all three studies, adding procedural fairness as a direct predictor of consumers’ responses increases the explanatory power of a model of price fairness significantly. Our model can explain peculiar real-world cases in which consumers reacted very strongly over relatively small price differences. The research findings point to the significance of the non-instrumental aspect of consumer’s demand for ethical (fair pricing) behavior and the need for companies to assess the fairness of their pricing practices from the consumer perspective. (shrink)

This paper incorporates fairness concerns and consumer reference price effects into a two-echelon building-material closed-loop supply chain consisting of a manufacturer and a retailer. By establishing four differential game models, we investigate the sustainable operations and cooperation of this supply chain. The four game models are a Nash noncooperative game, Stackelberg game with cost sharing, Stackelberg game with fairness concerns and cost sharing, and centralized decision model. By using dynamic models and optimal control theory, we obtain the (...) two members’ optimal equilibrium strategies in the supply chain. Analytical results show that the consumer reference price effect has a positive impact on the manufacturer’s effort level, retailer’s publicity level, and product brand goodwill, which can improve the supply chain performance. The retailer’s partial commitment to cost sharing can enhance the production enthusiasm of the manufacturer, improve the brand reputation of the product, and enhance the two members’ individual profitability. The distributional fairness concerns of the manufacturer not only prevent the manufacturer and retailer from achieving Pareto improvement but also lead to the decline of the manufacturer’s effort level and profitability. The research conclusions of this paper can provide some insights into the cooperation and sustainable development of the supply chain. (shrink)

A recent controversy concerning the pricing of drugs and other technological innovations funded by public dollars raised profound moral and social questions, questions the bioethics community has long overlooked.

Selling fair-trade products can be problematic because of their higher price when compared with conventional alternatives. We propose that one way to solve this problem is to make consumers aware of the benefits of fair-trade. To this end, we perform three experimental studies to show that partitioned pricing (PP), which explicitly displays fair-trade as a separate price component, increases consumers’ purchase intention toward the fair-trade product. This effect can be explained by increased perceptions of price fairness, (...) which itself is mediated through transparency (but only if an additional verbal justification of the fair-trade price component is present). In the absence of such a verbal justification, recalled prices instead of transparency explain the positive effect of PP on consumers’ purchase intentions. Interestingly, boundary conditions of this effect barely exist. Our incentive-aligned study illustrates that PP is associated with a 20% increase in purchases of fair-trade products. The results demonstrate an opportunity to increase the market share of fair-trade products, which increases social welfare and sustainability. (shrink)

Kennedy School of Government, Harvard University, USA, mathias_risse{at}ksg.harvard.edu ' + u + '@' + d + ' '//--> It is a widespread view that support for Fair Trade is called for, whereas agricultural subsidies are pegged as unjustifiable. Though one supports farmers in developing countries while the other does the same for those in already developed ones, there are, nonetheless, similarities between both scenarios. Both are economically `inefficient', upholding production beyond what the market would sustain. In both cases, supportive arguments (...) can assume two forms. First, such arguments might draw on normative claims made by producers. In the case of agricultural subsidies, farmers in developed countries assert claims against their fellow citizens, who ought to accept redistributive measures to keep them in business. In the case of Fair Trade, the claim can be made by farmers in developing nations against consumers, who ought to pay higher prices to keep them in business (under conditions deemed acceptable). Second, arguments to keep producers in business might be presented as the prerogative of both groups: even if farmers in developed countries did not have a claim to be kept in business, these countries would have the right to take measures to do so because they value their products. In the case of Fair Trade, even if farmers in developing nations had no claim against consumers, it is a consumer prerogative to pay more to keep them in business because they value their product or the process of producing it. There are, of course, differences between these scenarios as well, but in light of these parallels in the moral cases for subsidies and Fair Trade, it will be illuminating to examine the arguments for and against subsidies and Fair Trade together. Key Words: trade • subsidies • fairness • markets • development. (shrink)

Online retailers are using advances in data collection and computing technologies to “personalize” prices, i.e., offer goods for sale to shoppers at their reservation prices, or the highest price they are willing to pay. In this paper, I offer a criticism of this practice. I begin by putting online personalized pricing in context. It is not something entirely new, but rather a kind of price discrimination, a familiar pricing practice. I then offer a fairness-based argument against it. (...) When an online retailer personalizes prices, it competes unfairly for the social surplus created by a transaction. I defend this argument against objections, and offer a simple remedy: online retailers should either disclose that they are personalizing prices, or stop doing so. (shrink)

Fair Trade coffee campaigns have improved the lives of small-scale coffee farmers and their families by raising wages, creating direct trade links to farming cooperatives, and providing access to affordable credit and technological assistance. Consumer demand for Fair Trade certified coffee is at an all-time high, yet cooperatives that produce it are only able to sell about half of their crops at the established fair trade price. This article explores the reasons behind this gap between supply and demand and (...) suggests ways to close it. The authors also offer some perspective on the limits of ethical consumption campaigns such as Fair Trade coffee. (shrink)

In the sixteenth and seventeenth centuries, members of the Salamanca School engaged in a sustained and sophisticated discussion of the issue of just prices. This article uses their contribution as a point of departure for a consideration of justice in pricing which will be relevant to current-day circumstances. The key theses of members of this school were that fairness of exchanges should be assessed objectively, that the fair price of an article is one equal to its ‘value’, and (...) that the best indicator of that value is the price that article commonly fetches in an open market. This article tries to bring to light the attractiveness of those views in order to guide current practice by contrasting them with alternative views, showing their connection with intuitively attractive basic standards, and linking them to commonly shared intuitions. (shrink)

The past decade has witnessed a surge of pricing innovations in the U.S. telecommunications industry. This book systematically reviews recent innovations in the economic theory of pricing and extends results to the conditions which characterise telecommunications markets. The implementation of normative pricing theory is examined in selected US telephone tariffs, providing a rich and diverse data base and laboratory for examining the practical consequences of pricing innovations. The authors develop and illuminate the relationships between the normative economic theory of pricing (...) - with its objectives of social welfare, economic efficiency, and fairness - and telecommunications pricing as it is practised by business and regulators. The general theoretical pricing principles and lessons of US pricing experience discussed are directly applicable to telecommunications services in other countries, and to numerous other industries including electricity, gas, rail and air transport, and postal services, as well as economists studying the economic theory of pricing. (shrink)

This paper explores the ethical obligations of pharmaceutical companies to charge fair prices for essential medicines. The moral issue at stake here is distributive justice. Rawls'' framework is especially germane since it underlines the material benefits everyone deserves as Kantian persons and the need for an egalitarian approach for the distribution of society''s essential commodities such as health care. This concern for distributive justice should be a critical factor in the equation of variables used to set prices for pharmaceuticals.

Pricing policies and fair-trade practices are critical for sustaining commercial relationships between firms and customers. Nevertheless, in current business practices, fairness has been mistakenly reduced to a minimalistic ethic wherein justice only demands legal and explicit norms to which commercial parties voluntarily agree. Aimed at giving a different explanation of commercial agreements, this paper will introduce a Virtue Ethics (VE) explanation of the relationship between pricing and the common good by taking up classical concepts related to justice in commerce. (...) In particular, we will explore three principles associated with the notion of fairness in commerce as defined in Neo-Aristotelian ethics towards a relationship between a common good and justice in pricing, i.e., proportionality, benevolence and well-being. To exemplify how these criteria of justice apply to decision-making in commercial practices, we will discuss several cases of fair and unfair commercial relationships. (shrink)

Normative and historical arguments support the idea that religion potentially shapes decisions to support fair trade products. That said, the question of how religion influences organizational decision-makers to purchase fair trade products in a business-to-business context has remained largely unaddressed. This research examines the interactive effect of individual religious commitment and contextual religious salience on an individual’s willingness to pay a price premium for a fair trade product, when buying on behalf of an organization. Findings from two experimental studies (...) reveal that the effect of a decision-maker’s religious commitment on his or her willingness to pay a price premium, for the purchase of a fair trade product on behalf of an organization, is moderated by the contextual salience of religion. Specifically, when religion is highly salient in the organizational context, religious commitment is positively related to the decision-maker’s willingness to pay a premium for the fair trade product; when contextual religious salience is low, religious commitment and willingness to pay a premium are unrelated. Implications for theory and practice are presented. (shrink)

This paper addresses the fairness of microcredit interest rates. Since microfinance institutions provide credit for the poor at relatively high prices, the fairness of their interest rates has been repeatedly debated. We first apply Rawls' principles of justice to the case of microcredit interest rates and suggest some limitations related to the hypothesis of rationality of the borrowers and the level of inequality. We then suggest another framework based on the analysis of the distribution of the benefits generated (...) by the transaction to assess the fairness of interest rates. We conceptualize this as the distribution of the bargaining range between the borrowers' and the institutions' reservation price and discuss what these reservation prices could be in the context of microfinance. (shrink)

The notion of fairness is frequently invoked in the context of food and agriculture, whether in terms of a fair marketplace, fair treatment of workers, or fair prices for consumers. In 2009, the Kellogg Foundation named fairness as one of four key characteristics of a “good” food system. The concept of fairness, however, is difficult to define and measure. The purpose of this study is to explore the notion of fairness, particularly as it is understood within (...) alternative food dialogues. Specifically, we wanted to answer the question of how alternative food entrepreneurs who are working to actualize fairness within local food networks understand this abstract notion. Using a multiple case study approach, the research for this project draws on semi-structured interviews that were conducted with key stakeholders in four alternative food businesses throughout the Midwest. (shrink)

ABSTRACT:Technological advances introduce the possibility that, in the future, firms will be able to use big-data analysis to discover and offer consumers their individual reservation price. This can generate some interesting benefits, such as a better state of affairs in terms of equality of both welfare and resources, as well as increased social welfare. However, these benefits are countered by considerations of relational equality. This article takes up the market-failures approach as its basis to demonstrate what is wrong with (...) using big data to personalize prices. The article offers an improvement to the market-failures approach and argues that what is wrong with using big data to personalize prices is that it unfairly undermines consumers’ ability to benefit from the market, which is the very point of having a market. (shrink)

Standard economic theory teaches that trade benefits all countries involved, at least in the long run. While there are other reasons for trade liberalization, this insight, going back to Ricardo's 1817 Principles of Political Economy , continues to underlie international economics. Trade also raises fairness questions. First, suppose A trades with B while parts of A's population are oppressed. Do the oppressed in A have a complaint in fairness against B? Should B cease to trade? Second, suppose because (...) of oppression or lower social standards, A's products are cheaper than B's. Can industries in B legitimately insist that their government take measures to help them compete? The Pauper-Labor Argument makes that case, and many economists enjoy dismissing it in undergraduate classes. Third, suppose A subsidizes its industries. If this lowers world market prices, does B have a fairness complaint against A? Ought countries to consider how trade policies affect others? This article is the first of two, which together develop a view that is meant to serve as a reference point for moral assessments of international trade policies. I develop this view by way of offering affirmative answers to these three questions. Since this discussion is organized around these three questions, the two studies can be read independently of each other. Key Words: the state • World Trade Organization • development • oppression • exploitation. (shrink)

While both economic and social considerations of fairness and equity play an important role in financial decision-making, it is not clear which of these two motives is more primal and immediate and which one is secondary and slow. Here we used variants of the ultimatum game to examine this question. Experiment 1 shows that acceptance rate of unfair offers increases when participants are asked to base their choice on their gut-feelings, as compared to when they thoroughly consider the available (...) information. In line with these results, Experiments 2 and 3 provide process evidence that individuals prefer to first examine economic information about their own utility rather than social information about equity and fairness, even at the price of foregoing such social information. Our results suggest that people are more economically rational at the core, but social considerations (e.g., inequality aversion) require deliberation, which under certain conditions override their self-interested impulses. (shrink)

Interest in ethical aspects associated to product acquisition and consumption is a growing trend among consumers. In this context, the concept of “product with ethical attributes” has arisen to refer to products with explicit social and environmental characteristics. However, one of the factors that most hinders the purchasing of these products is certainly price. Given the difficulty of reducing price, the question that arises is the extent to which other product attributes can attenuate the negative impact of (...) class='Hi'>price on perceived value. We assume that the special benefits associated to this type of products are, at a different level, attenuators of the relationship between price and perceived value. Focusing on Fair Trade organic coffee, hypotheses are tested regarding survey data from 407 customers. They were interviewed in an actual purchasing scenario. The models are tested using conventional Structural Equation Models and the Latent Moderated Structural Equation method. The results obtained shed some light on a highly generalised belief that the marketing of these products can only be improved by reducing their price. However, although a price reduction could be desirable, albeit complicated in this product category, its effects could be reduced by acting on other variables such as the ethical aspects, quality and healthiness of this product category. (shrink)

The recent proliferation of new data and technologies enables increasingly finer personalization of products and prices in every domain. In insurance, this revives and enlarges old debates around fairness that have never been completely settled. We will argue that the commonly accepted “actuarial fairness” as based on the “individual cost of risk” derives in fact from a conflation: while it indicates the average cost for a group of insureds from the perspective of an insurance company—and is therefore sound (...) from a business profitability viewpoint—it is arguable whether it represents the “fair price” for the individual insured. We first show in a historical perspective the intertwinement of conceptions of fairness with knowledge, in order to point to the alternative to actuarial fairness for insurance. We then describe the intrinsic difference between the insured and the insurer when underwriting an insurance contract. Finally, we build on this distinction to discuss the meaning of fairness in insurance prices. We thus hope to re-center the debate around insurance fairness on its underlying solidarity mechanisms rather than technical and actuarial considerations. (shrink)

_A concise history of “just price,” from Aristotle to the present day_ The question of what constitutes a fair price has been at the center of market interactions since the time of Aristotle. Should a seller sell to the highest bidder, or is there some other standard, such as a morally defined price, to be applied? Charles R. Geisst traces the ways that philosophers, religious leaders, and economists have sought to answer that question, from antiquity through the (...) modern era. Aristotle’s thinking on usury influenced the idea of pricing well into the Renaissance. In his view, money was barren and should not be used to beget more money. As trade became more extensive, the strictures placed on pricing by Aristotelian thinking began to fall away, replaced by Roman and common-law conceptions of value and interest. Geisst’s book follows the evolution of that thought—influenced along the way by figures such as Copernicus, Fibonacci, Adam Smith, Marx, Cassel, and Keynes—and charts parallel developments in European and Islamic notions of fair pricing. Today, pricing is seen as an economic inevitability, dictated by the laws of supply and demand. But this has not always been the case. As Geisst argues, the idea of a just price was once a moral concept, long before it was an economic one. (shrink)

Are humans fair by nature? Why do we often willingly trust strangers or cooperate with them even if those actions leave us vulnerable to exploitation? Does this natural inclination towards fairness or trust have implications in the market-place? Traditional economic theory would perhaps think not, perceiving human interaction as self-interested at heart. There is increasing evidence however that social norms and norm-driven behaviour such as a preference for fairness, generosity or trust have serious implications for economics. This book (...) provides an easily accessible overview of economic experiments, specifically those that explore the role of fairness, generosity, trust and reciprocity in economic transactions. Ananish Chaudhuri approaches a variety of economic issues and problems including: Pricing by firms Writing labour contracts between parties Marking voluntary contributions to charity, Addressing issues of environmental pollution, Providing micro-credit to small entrepreneurs, Resolving problems of coordination failure in organizations. The book discusses how norm-driven behaviour can often lead to significantly different outcomes than those predicted by economic theories and these findings should in turn cause us to re-think how we approach economic analysis and policy. Assuming no prior knowledge of economics and containing a variety of examples, this reader friendly volume will be perfect reading for people from a wide range of backgrounds including students and policy-makers. The book should appeal to economics undergraduates studying experimental economics, microeconomics or game theory as well as students in social psychology, organizational behaviour, management and other business related disciplines. (shrink)

This essay offers a philosophical defense of deception about reservation prices in business negotiation. Its discussion is prompted by arguments that Charles N.C. Sherwood makes in a recent issue of Business Ethics Quarterly and develops ideas I put forward in an earlier issue of Business Ethics Quarterly. The essay argues that although reservation price deception cannot be justified by appeal to the consent of negotiating parties, it can be justified by appeal to a separate but related notion, assumption of (...) risk, as long as the assumption of risk occurs in a suitably fair context. (shrink)

We thank the authors of the five commentaries for their careful and highly constructive consideration of our paper,1 which has enabled us to develop our proposal. Participation in research has traditionally been viewed as altruistic. Over time, payments for inconvenience and lost wages have been allowed, as have small incentives, usually in kind. The problem, particularly with controlled human infection model (CHIM) research or ‘challenge studies’, is that they are unpleasant and time-consuming. Researchers want to offer carrots to incentivise participation (...) (as Fernandez Lynch and Largent suggest2). We are proposing that research participation be viewed as a job with the full suite of financial entitlements of fairly remunerated work, including payment for risk and labour law protections. This would be a significant shift from current practice and standards. Ambuehl, Ockenfels and Roth have grasped this basic point and have beautifully elaborated how a fair price could be arrived at using economic theory. They build on our proposal helpfully and suggest ‘(1) salary for time involvement that is adjusted to account for the amount of discomfort experienced during participation, (2) insurance against ex post adverse outcomes and (3) ex ante compensation for risks that cannot be compensated ex post (such as death).’3 This effectively addresses Fernandez Lynch and Largent’s2 concern (echoed by Jamrozik and Selgelid4) that compensation for risk is inappropriate for harms which do not eventuate. However, because death cannot be compensated for, there must be payment for risk of death, as Ambuehl, Ockenfels and Roth convincingly argue.3 Indeed, the three-part model suggested by Ambuehl, Ockenfels and Roth makes us realise that job model would be a better title for our model than a payment for risk model. The alternative to a properly remunerated job model is the original altruistic model. However, this …. (shrink)

In actuarial parlance, the price of an insurance policy is considered fair if customers bearing the same risk are charged the same price. The estimate of this fair amount hinges on the expected value obtained by weighting the different claims by their probability. We argue that, historically, this concept of actuarial fairness originates in an Aristotelian principle of justice in exchange (equality in risk). We will examine how this principle was formalized in the 16th century and shaped (...) in life insurance during the following two hundred years, in two different interpretations. The Domatian account of actuarial fairness relied on subjective uncertainty: An agreement on risk was fair if both parties were equally ignorant about the chances of an uncertain event. The objectivist version grounded any agreement on an objective risk estimate drawn from a mortality table. We will show how the objectivist approach collapsed in the market for life annuities during the 18th century, leaving open the question of why we still speak of actuarial fairness as if it were an objective expected value. (shrink)

The move from open outcry to electronic trading added another responsibility to futures exchanges—that of matching orders between buyers and sellers. Matching systems can affect the level and speed of price discovery, the distribution of revenue, as well as the level of price efficiency of a given market. Whether the matching system is procedurally fair is another important consideration. I argue that while FIFO (First In First Out) is a fair procedure in principle and is perceived as the (...) default matching system, it is not a fair procedure in practice. Likewise, while pro rata is a fair procedure in principle, it is not so in practice. Nevertheless, both FIFO and pro rata are relics of an open outcry system. Instead, I propose an alternative approach to matching systems that builds on the strengths of electronic trading—the ability to randomize in real time. I introduce random selection for service (RSS) as a matching system that is procedurally fair both in principle and in practice. (shrink)

This study explores the legal and ethical issues associated with contract pricing. In particular, it focuses on a set of legal precedents which have addressed the enforceability of allegedly unfair contract prices. Traditionally, the common law has emphasized the consent of the parties. If the parties consented to a given price; it is presumptively fair and enforceable. The cases reviewed in this study, however, seem to draw upon alternative moral conceptions of fairness not normally associated with the common (...) law. The analysis begins by distinguishing the traditional legal conception of fairness from alternative moral conceptions. The cases are then read with a critical eye so as to tease out the underlying principles which best explain them. The analysis illustrates that, notwithstanding judicial rhetoric to the contrary, the courts continue to employ the traditional legal notion of fairness, to the exclusion of alternative moral concerns. The study clarifies an otherwise murky area of the law and illustrates that the legal meaning of fairness differs greatly from the moral one. (shrink)

The paper explores a general framework for thinking about the idea of the just price. The approach is grounded in a basic aspect of the nature of exchange, namely, that the latter usually occurs when both parties believe they will be better off as a result. Put differently, an exchange is normally performed because both parties stand to gain something from it. The distributive question that arises from this observation is how one ought to divide such gains. The connection (...) with the idea of the just price is not necessarily an obvious one, yet it is relatively straightforward. Assuming that an exchange involves money, the price at which two agents transact will correspond to a specific division of the gains from the transaction. Conversely, any specification of a fair division of the gains from exchange individuates a specific price as the just or fair price. The paper analyzes the main features of this approach to the determination of the just price, explains one of its main virtues, defends it against an alleged weakness and criticizes as inadequate two of its traditional interpretations. The upshot of the discussion is that while the idea that the just price of a transaction depends on how the latter divides the gains from exchange does not suffer from general flaws and is in fact characterized by an important good making feature, the two principal ways in which it has been deployed are implausible. (shrink)

In a sample of 615 Belgians a model for fair trade buying behaviour was developed. The impact of fair trade knowledge, general attitudes towards fair trade, attitudes towards fair trade products, and the perception of the quality and quantity of fair trade information on the reported amount of money spent on fair trade products were assessed. Fair trade knowledge, overall concern and scepticism towards fair trade, and the perception of the perceived quantity and quality of fair trade information, influence buying (...) behaviour directly and indirectly through product attitudes. Interest in fair trade products, price acceptability and product liking have a significant impact on fair trade buying behaviour. Product interest is the most important variable influencing buying behaviour. Implications for the campaigns of governments and for the marketing strategy of fair trade organisations are offered. (shrink)

The paper examines a specific approach to the idea of the just price. The approach takes its cue from a basic insight about the nature of exchange, namely, that the latter occurs when both parties to the exchange stand to gain something from it. The distributive question that arises from this observation is how, or according to which principle, we ought to divide such gains. The paper rejects two intuitive answers. The first is that the just price is (...) that at which the gains from exchange are equally distributed between the parties. The second is that the just price is the price at which the party that is worse off prior to the transaction gains as much as possible from it. The problem with the former is that it condones exploitation when one of the two parties is vulnerable. The problem with the latter is that it cannot be plausibly generalized to all transactions. The paper then offers a novel alternative that both preserves the intuitive appeal of the approaches that have been criticized and is able to avoid their weaknesses. This can be achieved by accepting an eclectic distributional ethic with a sufficientarian core. (shrink)

Community standards, ethical norms, and perceptions of fairness often serve as constraints on pure profit maximizing behavior. Consider the following examples: Most hardware stores refrain from raising prices on snow shovels after a major snow storm, even where short term profits might be increased. Most employers do not lower wages for existing employees, even as unemployment in the area increases. Automobile dealerships rarely raise sticker prices to cope with the long waiting periods for a popular model. Each of these (...) anomalies is consistent with the proposition that firms increase profits subject to fairness constraints.This paper examines perceptions of fairness in the residential real estate industry and explores how community standards affect economic decision-making. The residential real estate industry is unique. One party to the transaction (the landlord) frames decisions as pure business decisions. The other party to the transaction (the tenant) frames decisions more broadly. While a tenant's choice of apartments is in part viewed as a business decision, tenants consider a broad spectrum of non-business issues, as well. (shrink)