Hiring Strategies and the Evolution of Honesty
AbstractThe evolution of honesty norms in a society is studied. Our approach is based on the hypothesis that hiring or firing strategies chosen by firms may affect honesty: if it becomes common knowledge in the society that being honest is better for workers than cheating employers, then the share of opportunists gradually go down. It is shown that different hiring strategies are rational under different honesty standards. If honesty is not a prevailing social norm and volumes of appropriated rent may by high enough, then firms are better off to stimulate honest behavior by increasing wages. For a relatively honest society, firing cheaters is the best strategy. If honesty standards are intermediate or citizens are too impatient, ignorance of cheating may be rational. Therefore one observes three possible patterns of honesty evolution: honesty norms may either descend to critically low level or stabilize at some point or rise and fall cyclically. We prove that honesty standard rises as losses from dishonest behavior or hiring cost increase, honesty standard falls as rent appropriation opportunities expand or citizens get more impatient, and high expectations of economic growth promote honesty.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 20053.
Date of creation: 2005
Date of revision:
Honesty; cheating; hiring strategies; evolution of behavioral norms;
Find related papers by JEL classification:
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barro, Robert J, 1996. " Institutions and Growth, an Introductory Essay," Journal of Economic Growth, Springer, Springer, vol. 1(2), pages 145-48, June.
- Tirole, Jean, 1996.
"A Theory of Collective Reputations (with Applications to the Persistence of Corruption and to Firm Quality),"
Review of Economic Studies, Wiley Blackwell,
Wiley Blackwell, vol. 63(1), pages 1-22, January.
- Tirole, J., 1993. "A Theory of Collective Reputations with Applications to the Persistence of Corruption and to Firm Quality," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 93-13, Massachusetts Institute of Technology (MIT), Department of Economics.
- Tirole, Jean, 1994. ""A Theory of Collective Reputations" with Applications to the Persistence of Corruption and to Firm Quality," IDEI Working Papers, Institut d'Ãconomie Industrielle (IDEI), Toulouse 38, Institut d'Économie Industrielle (IDEI), Toulouse.
- Somanathan, E. & Rubin, Paul H., 2004. "The evolution of honesty," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 54(1), pages 1-17, May.
- Martin Raiser & Alan Rousso & Franklin Steves, 2004.
"Trust in Transition: Cross-country and Firm Evidence,"
- Martin Raiser & Alan Rousso & Franklin Steves, 2004. "Trust In Transition: Cross Country And Firm Evidence," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 2004-640, William Davidson Institute at the University of Michigan.
- Martin Raiser & Alan Rousso & Franklin Steves, 2003. "Trust in transition: cross-country and firm evidence," Working Papers, European Bank for Reconstruction and Development, Office of the Chief Economist 82, European Bank for Reconstruction and Development, Office of the Chief Economist.
- Vladimir Popov, 2000. "Shock Therapy Versus Gradualism: The End Of The Debate (Explaining The Magnitude Of Transformational Recession)," Comparative Economic Studies, Palgrave Macmillan, Palgrave Macmillan, vol. 42(1), pages 1-57, April.
- Andrei Shleifer, 1996.
"Government in Transition,"
Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research
1783, Harvard - Institute of Economic Research.
- J. Kornai., 2003. "Honesty and Trust in the Light of the Post-Socialist Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 9.
- Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," World Bank Research Observer, World Bank Group, World Bank Group, vol. 15(1), pages 99-135, February.
- Hanming Fang, 2001. "Social Culture and Economic Performance," American Economic Review, American Economic Association, American Economic Association, vol. 91(4), pages 924-937, September.
- Bohnet, Iris & Croson, Rachel, 2004. "Trust and trustworthiness," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 55(4), pages 443-445, December.
- Nyborg, Karine & Rege, Mari, 2003. "On social norms: the evolution of considerate smoking behavior," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 52(3), pages 323-340, November.
- Polterovich, Victor, 2000. "Civic Culture and Economic Transition in Russia," MPRA Paper, University Library of Munich, Germany 20068, University Library of Munich, Germany.
- Polterovich, Victor, 2007. "Institutional Trap," MPRA Paper, University Library of Munich, Germany 20595, University Library of Munich, Germany.
- Polterovich, V., 2013. "General Social Analysis and Reform Design," Journal of the New Economic Association, New Economic Association, New Economic Association, vol. 17(1), pages 185-188.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.