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RESEARCH PRODUCT

Complementary Consumer Responsibility - The Limits to Immoral Delegation in Markets

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Delegation has been shown to facilitate individual immoral behavior. It is however unclear, if these findings extend to markets, where consumers may punish firms who delegate immoral production decisions. I address this question by employing an experimental market paradigm, involving an unfair product, containing a negative externality, and a fair product without externality. Passive delegation of the production decision, with random matching between an owner and a seller, leads to a lower share of the fair product being traded, consistent with the findings on responsibility diffusion. Active delegation in contrast, where owners have a choice over sellers first, increases the share of the fair product relative to passive delegation. Responsibility norm beliefs support a mechanism of complementary consumer responsibility, which assigns more responsibility to consumers when owners have a choice over sellers and, therefore, over the product type offered. Consumers' buying decisions may therefore limit the possibility for delegating immoral behavior, depending on the specific design of the delegation.