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Self-Esteem, Moral Capital, and Wrongdoing

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  • Ernesto Dal Bó
  • Marko Terviö

Abstract

We present an infinite-horizon model of moral standards where self-esteem and unconscious drives play key roles. In the model, an individual receives random temptations (such as bribe offers) and must decide which to resist. Individual actions depend both on conscious intent and a type reflecting unconscious drives. Temptations yield consumption value, but keeping a good self-image (a high belief of being the type of person that resists) yields self-esteem. We identify conditions for individuals to build an introspective reputation for goodness ("moral capital") and for good actions to lead to a stronger disposition to do good. Bad actions destroy moral capital and lock-in further wrongdoing. Economic shocks that result in higher temptations have persistent effects on wrongdoing that fade only as new generations replace the shocked cohorts. Small parametric differences across societies may lead to large wrongdoing differentials, and societies with the same moral fundamentals may display different wrongdoing rates depending on how much past luck has polarized the distribution of individual beliefs. The model illustrates how optimal deterrence may change under endogenous moral costs and how wrongdoing may be compounded as high temptation activities attract individuals with low moral capital.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14508.

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Date of creation: Nov 2008
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Publication status: published as SELF-ESTEEM, MORAL CAPITAL, AND WRONGDOING Ernesto Dal Bó1, Marko Terviö2 Article first published online: 3 JUN 2013 DOI: 10.1111/jeea.12012 © 2013 by the European Economic Association Issue Journal of the European Economic Association Journal of the European Economic Association Themed Issue: Social Norms: Theory and Evidence from Laboratory and Field Volume 11, Issue 3, pages 599–663, June 2013
Handle: RePEc:nbr:nberwo:14508

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  1. Matteo Cervellati & Joan Esteban & Laurence Kranich, 2007. "The Social Contract with Endogenous Sentiments," Working Papers 311, Barcelona Graduate School of Economics.
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Cited by:
  1. Cervellati, Matteo & Vanin, Paolo, 2013. "“Thou shalt not covet”: Prohibitions, temptation and moral values," Journal of Public Economics, Elsevier, vol. 103(C), pages 15-28.
  2. S. Nageeb Ali, 2009. "Learning Self-Control," Levine's Working Paper Archive 814577000000000384, David K. Levine.
  3. Larbi Alaoui & Alvaro Sandroni, 2013. "Predestination and the Protestant Ethic," Working Papers 679, Barcelona Graduate School of Economics.
  4. Ned Augenblick & Jesse M. Cunha & Ernesto Dal Bó & Justin M. Rao, 2012. "The Economics of Faith: Using an Apocalyptic Prophecy to Elicit Religious Beliefs in the Field," NBER Working Papers 18641, National Bureau of Economic Research, Inc.
  5. Alonso, Ricardo & Brocas, Isabelle & Carrillo, Juan D, 2011. "Resource Allocation in the Brain," CEPR Discussion Papers 8408, C.E.P.R. Discussion Papers.
  6. Larbi Alaoui & Alvaro Sandroni, 2013. "Predestination and the Protestant ethic," Economics Working Papers 1350, Department of Economics and Business, Universitat Pompeu Fabra.

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