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How does probabilistic harm affect dishonesty? An experiment

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  • Bahník, Štěpán
  • Vranka, Marek

Abstract

Dishonest actions, while beneficial to perpetrators, can have significant negative effects on financial markets and organizations. The caused harm is, however, often unclear and unpredictable, possibly making dishonesty easier to justify. We conducted an experiment where participants could break a rule for increased rewards, potentially harming a third party. By manipulating the probability of harm while maintaining the size of expected harm constant, we explore how the probability of harm influences dishonesty. Contrary to expectations, our results suggest that the manipulation does not impact the dishonest behavior. These findings underscore the complexity of dishonest behavior in contexts relevant to finance.

Suggested Citation

  • Bahník, Štěpán & Vranka, Marek, 2023. "How does probabilistic harm affect dishonesty? An experiment," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007456
    DOI: 10.1016/j.frl.2023.104373
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    More about this item

    Keywords

    Dishonesty; Bribery; Experiment; Justification;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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