The Business of Mistakes: Moral Acceptability of Consumer Exploitation

Abstract

The rise of behavioral economics has revealed that consumers often make systematic mistakes that businesses can exploit. This raises a fundamental moral question: Is it morally acceptable for firms to sell products that consumers would be better off not buying? In a global study across 40 countries, we show that a large majority of respondents view such consumer exploitation as morally wrong, yet at the same time believe that businesses routinely engage in these practices. Moral preferences and beliefs about firm behavior strongly predict attitudes toward consumer regulation, both across individuals and across countries. We identify three distinct moral types—Libertarians, Substantialists, and Proceduralists—and show that their prevalence at the country level is closely linked to support for consumer regulation. In a second large-scale study in the United States, we examine how moral acceptability depends on the nature of firm behavior—whether the firm manipulates information, exploits a behavioral bias, or provides all relevant information—and on beliefs about whether consumers can avoid mistakes through effort. Finally, we relate moral preferences to real-world political and market behavior. Taken together, the results provide novel global evidence on how people evaluate firm behavior that takes advantage of consumer mistakes and how these moral views shape support for consumer protection policies.