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A Multimethod Approach to Identifying Norms and Normative Expectations Within a Corporate Hierarchy: Evidence from the Financial Services Industry

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Author Info

  • Stephen V. Burks

    ()
    (Division of Social Science, University of Minnesota, Morris, Morris, Minnesota 56267; Institute for the Study of Labor (IZA), D-53113 Bonn, Germany; and Centre for Decision Research and Experimental Economics (CeDEx), University of Nottingham, Nottingham NG7 2RD, United Kingdom)

  • Erin L. Krupka

    ()
    (School of Information, University of Michigan, Ann Arbor, Michigan 48109; and Institute for the Study of Labor (IZA), D-53113 Bonn, Germany)

Abstract

We use an incentive-compatible economic experiment and surveys in the field at a large financial services firm to identify the norms for on-the-job behavior among financial advisers and their leaders, and the normative expectations each group has of the other. We examine whistle-blowing on a peer, an incentive clash between serving the client and earning commissions, and a dilemma about fiduciary responsibility to a client. We find patterns of agreement among advisers, among leaders, and between the two groups, that are consistent with company guidelines identified ex ante. However, we also find measurable differences between what leaders expect and the actual norms of advisers. When there is such a mismatch we are able to distinguish miscommunication from ethical disagreement between leaders and advisers. Finally, we show that when advisers' personal ethical opinions do not match group norms, this mismatch is correlated with job dissatisfaction and lying for money in a second experiment. This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.

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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 58 (2012)
Issue (Month): 1 (January)
Pages: 203-217

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Handle: RePEc:inm:ormnsc:v:58:y:2012:i:1:p:203-217

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Keywords: ethics; norms; vignette; survey; coordination game; incentive compatible; financial services; financial adviser; whistle-blowing; fiduciary responsibility; organizational fit;

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References

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  1. Dean S. Karlan, 2005. "Using Experimental Economics to Measure Social Capital and Predict Financial Decisions," Working Papers 182, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  2. Paul Fischer & Steven Huddart, 2008. "Optimal Contracting with Endogenous Social Norms," American Economic Review, American Economic Association, vol. 98(4), pages 1459-75, September.
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  7. Akerlof George A & Kranton Rachel, 2010. "Identity Economics," The Economists' Voice, De Gruyter, vol. 7(2), pages 1-3, June.
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  16. Krupka, Erin L. & Weber, Roberto A., 2008. "Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary?," IZA Discussion Papers 3860, Institute for the Study of Labor (IZA).
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Cited by:
  1. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2010. "Peer Effects In Pro-Social Behavior: Social Norms Or Social Preferences?," Discussion Papers 2010-23, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Charness, Gary & Schram, Arthur, 2012. "Social and Moral Norms in the Laboratory," University of California at Santa Barbara, Economics Working Paper Series qt6rv7x0tf, Department of Economics, UC Santa Barbara.
  3. Nikiforakis, Nikos & Noussair, Charles N. & Wilkening, Tom, 2012. "Normative conflict and feuds: The limits of self-enforcement," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 797-807.
  4. Danilov, Anastasia & Sliwka, Dirk, 2013. "Can Contracts Signal Social Norms? Experimental Evidence," IZA Discussion Papers 7477, Institute for the Study of Labor (IZA).

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