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The Market Instinct: The Demise of Social Preferences for Self-Interest


Reeson, AF and Tisdell, JG, The Market Instinct: The Demise of Social Preferences for Self-Interest, Environmental and Resource Economics, 47, (3) pp. 439-453. ISSN 0924-6460 (2010) [Refereed Article]

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DOI: doi:10.1007/s10640-010-9387-0


Environmental policy design has much to gain from a better understanding of existing voluntary behaviour and motivations. In laboratory experiments, participants often exhibit social preferences such as altruism, spite, reciprocity and notions of fairness. In contrast, traditional neoclassical theory assumes that people act rationally in a way that maximises their self-interest. In environmental markets, social preferences and self-interest interact. We apply experimental economics to test the hypothesis that social preferences are not maintained in the presence of a competitive market institution. In the initial public goods game, many participants were prepared to make costly voluntary contributions. However the introduction of the market institution triggered a 'market instinct' in experimental participants. They abandoned the social preferences they were previously expressing and became self-interested profit maximisers. This self-interested behaviour persisted even after the market institution was discontinued. These findings are important to understanding the role and impact of markets for environmental policy. © 2010 Springer Science+Business Media B.V.

Item Details

Item Type:Refereed Article
Research Division:Economics
Research Group:Applied economics
Research Field:Experimental economics
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Market-based mechanisms
UTAS Author:Tisdell, JG (Professor John Tisdell)
ID Code:68215
Year Published:2010
Web of Science® Times Cited:19
Deposited By:Economics and Finance
Deposited On:2011-03-10
Last Modified:2014-10-09

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