BazermanMoore

116 Chapter 7: Fairness and Ethics in Decision Making
unfair. Consumers seem to grant special status to the manufacturer’s list price, even if
they do not expect to pay that amount. The list price acts as a critical anchor for assessments
of fairness. It is unacceptable to exceed that amount. Yet, there is no normative
basis for the manufacturer’s list price having this special value.
The pattern that emerges is that individuals are concerned with departures from
the status quo and that economically justifiable actions will often be perceived as unfair.
We seem to rely on list prices and current prices to set a reference point against which
we assess changes. When prices change, interpretations of fairness are clearly influenced
by the framing effects we discussed in Chapter 4. It is hard to argue that the
resulting fairness judgments are rational. Nevertheless, managers ought to be concerned
about the way their actions are likely to be perceived by employees, colleagues,
business partners, and customers.
Thaler (2004) documents multiple examples in which consumers allow their emotions,
rather than market forces, to decide what is fair. He cites a variety of examples:
Delta’s attempt to charge $2 extra per ticket for tickets not purchased on the Internet,
First Chicago’s idea of a $3 charge for doing business with a human teller, Coke’s development
of vending machines that change price based on demand level, and American
Airlines’ enormous bonuses to executives at the same time the company asked
union employees for substantial wage concessions. In each case, there was no evidence
that these actions violated market pricing. However, most of us sense intuitively that
these were bad business ideas because most people would perceive them to be
‘‘unfair.’’
When We Resist ‘‘Unfair’’ Ultimatums
Consider the following situation:
You are traveling on an airplane, sitting in an aisle seat next to an eccentric-looking woman
(Vivian) in the middle seat. Next to her, in the window seat, is a rather formal-looking
businessperson (Mark). About thirty minutes into the flight, Vivian interrupts you and
Mark. She explains that she is quite wealthy, that she becomes bored on flight, and that
she likes to pass the time by playing games. She then pulls fifty $100 bills out of her wallet
and makes the following proposition: ‘‘I will give the two of you this $5,000 provided that
you can agree on how to split the money. In splitting up the money, however, I will impose
two rules. First, Mark must decide how the $5,000 is to be split between the two of you.
Then, you [the reader] will decide whether to accept the split. If you do accept, then you
and Mark will receive the portion of the $5,000 based on Mark’s allocation. If you do not
accept the split, then you and Mark will each receive nothing.’’ Both you and Mark agree to
play the game. Mark thinks for a moment and then says, ‘‘I propose that the $5,000 be split
as follows: I get $4,900 and you get $100.’’ Now it is up to you: Will you agree to this split?
If you are like most people, you will probably reject this split. Why? Obviously,
rejecting such a deal is inconsistent with traditional notions of economic rationality,
because each party would be better off (þ$4,900 for Mark and þ$100 for you) if you
were to accept it. However, you might choose to reject this offer for a variety of reasons
that lie outside self-interested wealth maximization. Reasons for rejecting the $100