ARE FAIRNESS CONSTRAINTS ON PROFIT-SEEKING IMPORTANT

We report the results of two experiments designed to probe the extent to which consumers will retaliate against firms that engage in ''unfair'' business practices. The first experiment presents hypothetical scenarios similar to those used by Kahneman et al. (1986b), but where retaliation against an unfair firm is costly. The second experiment simulated one of these scenarios and gave subjects the opportunity to retaliate ''for real''. Results indicate a moderately large loss in customer base due to unfairness.