The rollout of artificial intelligence (AI) is a moral minefield. AI can do many things society is not comfortable with, from the obviously wrong (faked intimate photos) to the callous (chatGPT-generated condolences) to the uncanny (Sony’s aibo robotic puppy). Technologists and marketers have struggled and will continue to struggle finding the limits of what should be done with AI.

Ethical, normative perspectives are necessary but not sufficient in this discussion. Even if everybody could agree on what is ethical, many market participants might still act unethically. And regular folks are apt to disagree with experts about what AI applications are acceptable. A positive (opposite of normative) viewpoint is useful to understand what will happen when AI is inevitably used in ways that people don’t like.

In that spirit, this article introduces a few papers from economics and management science literature about “repugnant transactions.” Full paper citations are at the bottom.

Roth (2007) gives a digestible introduction to the economic conception of “repugnance” as a feature of transactions and how it can shape markets, with special focus on organ donation markets. A transaction is defined as repugnant in this literature if a substantial portion of society wants to abstain from participating and also wants to stop others from participating.

Healy & Krawiec (2017) extend the discussion to difficulty in predicting which transactions consumers will find repugnant. A fine line often separates what is and isn’t acceptable and perceptions vary based on culture. The authors emphasize how hard it is to change consumers’ minds about what should be considered repugnant and instead cast it as a mitigation problem for market designers.

Leuker et al. (2021) report results of experiments the authors conducted to determine whether and why subjects find a transaction repugnant. They isolate five factors that contribute to repugnance: moral outrage, need for regulation, incommensurability, exploitation, and unknown risk. (See Table 3 and Figure 2 from Leuker et al. (2021) below.)

Allen et al. (2022) tie multiple strands of literature together to consider the roles of entrepreneurship in repugnant markets. They map Leuker et al’s (2021) five factors of repugnance to Williamson’s (2000) four-level typology of institutions, which are arranged in order of permanence: traditional morality, legal rules, governance structures, and market participants. The purpose of this mapping is to assert that not all causes for repugnance run equally deep. Some are easier to change than others. It is faster to resolve repugnance motivated by a need for regulation than by moral outrage, for example.

Schoemaker and Tetlock (2012) write to non-academic organizational leaders about how to manage risks related to taboo subjects, a concept closely related to repugnance. They make practical suggestions about how to resolve blindspots when taboos prevent an organization from considering some risks. The authors suggest rhetorical approaches to justify violations of taboos. They advise an admittedly Machiavellian approach of obfuscation when taboos must be broken for whatever reason.

Hudson & Okhuysen (2009) present a qualitative study of an industry that suffers core-stigma, meaning that the organization’s core mission is heavily stigmatized. It is a useful account of the coping strategies that such businesses employ and of the risks to non-stigmatized actors of associating with them.

---

Allen, D. W. E., Berg, C., & Davidson, S. (2022). Repugnant innovation. Journal of Institutional Economics, 1–12. https://doi.org/10.1017/s1744137422000364

Healy, K., & Krawiec, K. D. (2017). Repugnance management and transactions in the body. American Economic Review Papers & Proceedings, 107(5), 86–90. https://doi.org/10.1257/aer.p20171108

Hudson, B. A., & Okhuysen, G. A. (2009). Not with a Ten-Foot Pole: Core Stigma, Stigma Transfer, and Improbable Persistence of Men’s Bathhouses. Organization Science, 20(1), 134–153. https://doi.org/10.1287/orsc.l080.0368

Leuker, C., Samartzidis, L., & Hertwig, R. (2021). What makes a market transaction morally repugnant? Cognition, 212. https://doi.org/10.1016/j.cognition.2021.104644

Roth, A. E. (2007). Repugnance as a Constraint on Markets. Journal of Economic Perspectives. http://vote98.ss.ca.gov/Returns/prop/

Schoemaker, P. J. H., & Tetlock, P. E. (2012). Taboo Scenarios: How to Think About the Unthinkable. CALIFORNIA MANAGEMENT REVIEW.

Williamson, O. E. (2000), ‘The New Institutional Economics: Taking Stock, Looking Ahead’, Journal of Economic Literature, 38(3): 595–613.