Thursday, November 24, 2011

Is a Wad of $20s Coercion, Tipping, or Euvoluntary Exchange?

Ward Boss sends this link.

Question: Is it unethical to make side payments? Are tips unethical? Since the answer is NOT always "yes," when does a tip become unethical?

And the guy who "bought" a seat on 1st interesting. There, I can the problem the airline has. If I have Gold Medallion status, or take Fundman (who has "Colossus Bestride the World" status, and the issue is "can you sell your seat?" We have made it so you can scalp seats at a concert. How about on a plane? The problem is not just the security issues (which are pretty dumb, if we are both going to be on the plane anyway). The problem is that the airline is trying to segment the market so they can price discriminate. Reselling ruptures the market segmentation necessary for that to work.

So, you can GIVE me your seat in the bulkhead, or even in first class. But you can't SELL it to me.

Side payments can, under some viewpoints, make a choice voluntary. My Duke colleague Jonathan Weiner has done some good work (Wiener 1999, Global Environmental Regulation: Instrument Choice in Legal Context, Yale Law Journal, Vol. 108, January 1999, SSRN Link) on this question. He looks at "beneficiaries pay" rather than "polluters pay" problems in the environment.

Other people would say that side payments are NOT voluntary, and in fact are coercive. Because they would define anything that "makes" me do something I would not otherwise do as coercive. This perspective is discussed (though not explcitly advocated) by another Duke colleague, Ruth Grant (Strings Attached: Untangling the Ethics of Incentives, Princeton U Press, November 2011)

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Do you have suggestions on where we could find more examples of this phenomenon?