Do Legal Standards A¤ect Ethical Concerns of Consumers? An Experiment on Minimum Wages

To address the impact of regulation on ethical concerns of consumers, we study the example of minimum wages. In our experimental market, consumers have monop-sony power, \u85 rms set prices and wages, and workers are passive recipients of a wage payment. We \u85nd that the consumers exhibit considerable fairness towards the work-ers by buying from the \u85rm with the higher price and the higher wage. We also nd that consumers have a tendency to split their demand equally between \u85rms, which is a simple strategy to provide both workers with a minimal payo¤. Introduc-ing a minimum wage in a mature market raises average wages despite its signi\u85cant crowding-out e¤ects on consumers fairness concerns. Abolishing a minimum wage crowds in consumers fairness concerns, but crowding in is not su ¢ cient to avoid overall negative e¤ects on the workerswages