Pigors, Mark and Rockenbach, Bettina ORCID: 0000-0003-2624-1964 (2016). The competitive advantage of honesty. Eur. Econ. Rev., 89. S. 407 - 425. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1873-572X

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Abstract

We study competitive markets where firms may lie to their workers to reduce costs. Consumers may benefit from firms' dishonesty through lower market prices. Does firms' (dis-)honesty affect consumers' purchasing decisions? Our experiment shows that when honesty is fully transparent, it can provide a competitive advantage: Honest firms sell more and - despite higher costs - achieve higher profits. This finding is in line with our equilibrium predictions when allowing for dishonesty-averse consumers. By identifying circumstances in which consumers - although not the addressee of dishonesty - punish firms for their within-firm dishonesty, we contribute both to behavioral ethics and behavioral industrial organization. (C) 2016 Elsevier B.V. All rights reserved.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Pigors, MarkUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Rockenbach, BettinaUNSPECIFIEDorcid.org/0000-0003-2624-1964UNSPECIFIED
URN: urn:nbn:de:hbz:38-259287
DOI: 10.1016/j.euroecorev.2016.09.001
Journal or Publication Title: Eur. Econ. Rev.
Volume: 89
Page Range: S. 407 - 425
Date: 2016
Publisher: ELSEVIER SCIENCE BV
Place of Publication: AMSTERDAM
ISSN: 1873-572X
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
SOCIAL-RESPONSIBILITY; PROCEDURAL UTILITY; INCENTIVES; BEHAVIOR; MARKETS; IMAGE; GOODSMultiple languages
EconomicsMultiple languages
Refereed: Yes
URI: http://kups.ub.uni-koeln.de/id/eprint/25928

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