Brown Bag Seminar Industrial Economics

Whether pro-social preferences identified in economic laboratory experiments survive in natural market contexts is an important and contested issue. We investigate how fairness in a laboratory experiment framed explicitly as a market exchange relates to preferences for fair trade products elicited before and at the end of the market experiment. We find that the willingness to buy at a higher price when higher wages are paid to the worker in the market experiment correlates both with the choice for a fair trade product before the laboratory experiment and with the willingness to pay a positive fair trade premium, elicited at the end of the experiment. The elicited fair trade choices and fair trade premia also correlate with questionnaire statements about attitudes towards fair trade and the stated frequency of buying fair trade products. These results indicate that fairness preferences as assessed in stylized lab- oratory experiments capture preferences for fair behavior exhibited in product choices. This supports the notion that market experiments are a useful tool to study the determinants of fair behavior in markets.