Is the price right? The role of morals, ideology, and tradeoff thinking in explaining reactions to price surges
The Institute of Economics will hold a seminar meeting as part of its Seminar Series on Tuesday, December 6, 2022: Nicola Lacetera from the University of Toronto will present the paper "Is the price right? The role of morals, ideology, and tradeoff thinking in explaining reactions to price surges".
Price surges often generate social disapproval and calls for regulation, such as price controls, but these interventions may cause economic inefficiencies and shortages. To study how individuals perceive and reason about sudden price increases for different products under different policy regimes, we conduct a survey experiment with Canadian and U.S. residents. We find that price increases are not seen just as signals of scarcity; they cause widespread opposition and strong, polarized moral reactions. However, acceptance of unregulated prices is higher when potential economic tradeoffs between unregulated and controlled prices are salient. The salience of tradeoffs also reduces the polarization of moral judgments between supporters and opponents of unregulated pricing. Text analysis of the responses to open-ended questions supports the interpretation of our findings, and a donation experiment shows consistence between stated and revealed preferences. The results suggest that awareness of the causes and potential consequences of price increases may induce less extreme views about the role of market institutions in governing the economy..
The seminar will be held in blended mode. In person participation is possible in aula 6 (sede centrale). For online participation please use the following link.