Are social norms an obstacle to honest behavior? Theory and experimental evidence

This study theoretically and experimentally investigates the effects of intrinsic dishonesty costs and other-regarding preferences reflecting social norms on honest behavior when people have the opportunity to act collaboratively and conduct mutual monitoring. We set up a theoretical model to clarify this effect and, then, report the results of a series of lab-in-the-field experiments conducted in two communities of Bangladesh, villages in the Chittagong Hill Tracts and the University of Chittagong. The participants played a trust game and a confidential die-roll game. Our experimental results show that mutual monitoring helped to increase honest behavior in both the traditional and university communities, but worked more effectively in the latter compared to the former. As predicted by our theoretical model, other-regarding preferences worked differently by significantly discouraging honest behavior among the community leaders but encouraging honest behavior among the students.