IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v94y2013icp90-102.html
   My bibliography  Save this article

Designing self-reporting regimes to encourage truth telling: An experimental study

Author

Listed:
  • Friesen, Lana
  • Gangadharan, Lata

Abstract

We report results from an experiment that investigates truthfulness in self-reporting under different reporting regimes. The experiment involves a production task with self-reporting of accidents, with reporting compulsory for some participants, but only voluntary for others. We find that dishonesty is prevalent, but accident reporting is more frequent with compulsory reporting compared with voluntary. Our results suggest that the lie aversion effect is stronger than any potential crowding out of intrinsic motivation to voluntarily report, and that careful design of self-reporting regimes is necessary by enforcement agencies to achieve satisfactory compliance outcomes. Our results are relevant for areas beyond regulatory compliance, including dishonesty in social security claims, insurance claims, workplace expense claims, income tax returns, and financial reporting.

Suggested Citation

  • Friesen, Lana & Gangadharan, Lata, 2013. "Designing self-reporting regimes to encourage truth telling: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 90-102.
  • Handle: RePEc:eee:jeborg:v:94:y:2013:i:c:p:90-102
    DOI: 10.1016/j.jebo.2013.08.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268113002072
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
    3. Malik Arun S., 1993. "Self-Reporting and the Design of Policies for Regulating Stochastic Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 241-257, May.
    4. Fehr, Ernst & Falk, Armin, 2002. "Psychological foundations of incentives," European Economic Review, Elsevier, vol. 46(4-5), pages 687-724, May.
    5. Alexander Pfaff & Chris William Sanchirico, 2004. "Big field, small potatoes: An empirical assessment of EPA's self-audit policy," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(3), pages 415-432.
    6. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
    7. Urs Fischbacher & Franziska Föllmi-Heusi, 2013. "Lies In Disguise—An Experimental Study On Cheating," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 525-547, June.
    8. Cardenas, Juan Camilo & Stranlund, John & Willis, Cleve, 2000. "Local Environmental Control and Institutional Crowding-Out," World Development, Elsevier, vol. 28(10), pages 1719-1733, October.
    9. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    10. Santiago Sánchez-Pagés & Marc Vorsatz, 2009. "Enjoy the silence: an experiment on truth-telling," Experimental Economics, Springer;Economic Science Association, vol. 12(2), pages 220-241, June.
    11. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    12. Tore Ellingsen & Magnus Johannesson, 2004. "Promises, Threats and Fairness," Economic Journal, Royal Economic Society, vol. 114(495), pages 397-420, April.
    13. Steven Shavell, 2002. "Law versus Morality as Regulators of Conduct," American Law and Economics Review, Oxford University Press, vol. 4(2), pages 227-257.
    14. Sanchez-Pages, Santiago & Vorsatz, Marc, 2007. "An experimental study of truth-telling in a sender-receiver game," Games and Economic Behavior, Elsevier, vol. 61(1), pages 86-112, October.
    15. Michael W. Toffel, 2008. "Coerced Confessions: Self-Policing in the Shadow of the Regulator," Journal of Law, Economics, and Organization, Oxford University Press, vol. 24(1), pages 45-71, May.
    16. Michael W. Toffel & Jodi L. Short, 2011. "Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate Effective Self-Policing?," Journal of Law and Economics, University of Chicago Press, vol. 54(3), pages 609-649.
    17. Stranlund, John K. & Murphy, James J. & Spraggon, John M., 2011. "An experimental analysis of compliance in dynamic emissions markets," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 414-429.
    18. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    19. Innes, Robert, 1999. "Remediation and self-reporting in optimal law enforcement," Journal of Public Economics, Elsevier, vol. 72(3), pages 379-393, June.
    20. Lundquist, Tobias & Ellingsen, Tore & Gribbe, Erik & Johannesson, Magnus, 2009. "The aversion to lying," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 81-92, May.
    21. Wayne B. Gray & Jay P. Shimshack, 2011. "The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 3-24, Winter.
    22. Heyes, Anthony G., 1996. "Cutting environmental penalties to protect the environment," Journal of Public Economics, Elsevier, vol. 60(2), pages 251-265, May.
    23. Günther G. Schulze & Björn Frank, 2003. "Deterrence versus intrinsic motivation: Experimental evidence on the determinants of corruptibility," Economics of Governance, Springer, vol. 4(2), pages 143-160, August.
    24. Innes, Robert, 2001. "Violator Avoidance Activities and Self-Reporting in Optimal Law Enforcement," Journal of Law, Economics, and Organization, Oxford University Press, vol. 17(1), pages 239-256, April.
    25. Nina Mazar & Dan Ariely, 2006. "Dishonesty in everyday life and its policy implications," Working Papers 06-3, Federal Reserve Bank of Boston.
    26. Dreber, Anna & Johannesson, Magnus, 2008. "Gender differences in deception," Economics Letters, Elsevier, vol. 99(1), pages 197-199, April.
    27. Anthony Scott & Stefanie Schurer & Paul H. Jensen & Peter Sivey, 2009. "The effects of an incentive program on quality of care in diabetes management," Health Economics, John Wiley & Sons, Ltd., vol. 18(9), pages 1091-1108.
    28. Roland Bénabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 489-520.
    29. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
    30. Magat, Wesley A & Viscusi, W Kip, 1990. "Effectiveness of the EPA's Regulatory Enforcement: The Case of Industrial Effluent Standards," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 331-360, October.
    31. Grogger, Jeffrey, 1991. "Certainty vs. Severity of Punishment," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 297-309, April.
    32. Friesen, Lana & Gangadharan, Lata, 2012. "Individual level evidence of dishonesty and the gender effect," Economics Letters, Elsevier, vol. 117(3), pages 624-626.
    33. Kaplow, Louis & Shavell, Steven, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 583-606, June.
    34. Sjaak Hurkens & Navin Kartik, 2009. "Would I lie to you? On social preferences and lying aversion," Experimental Economics, Springer;Economic Science Association, vol. 12(2), pages 180-192, June.
    35. Rode, Julian, 2010. "Truth and trust in communication: Experiments on the effect of a competitive context," Games and Economic Behavior, Elsevier, vol. 68(1), pages 325-338, January.
    36. Nuno Garoupa, 2003. "Behavioral Economic Analysis of Crime: A Critical Review," European Journal of Law and Economics, Springer, vol. 15(1), pages 5-15, January.
    37. Brown, Paul M. & Stewart, Steven, 1999. "Avoiding severe environmental consequences: evidence on the role of loss avoidance and risk attitudes," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 179-198, February.
    38. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:soceco:v:75:y:2018:i:c:p:26-30 is not listed on IDEAS
    2. Kocher, Martin G. & Schudy, Simeon & Spantig, Lisa, 2016. "I lie? We lie! Why? Experimental evidence on a dishonesty shift in groups," Discussion Papers in Economics 28966, University of Munich, Department of Economics.
    3. repec:kap:regeco:v:52:y:2017:i:2:d:10.1007_s11149-017-9329-7 is not listed on IDEAS
    4. Faravelli, Marco & Friesen, Lana & Gangadharan, Lata, 2015. "Selection, tournaments, and dishonesty," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 160-175.
    5. Burfurd, Ingrid & Gangadharan, Lata & Nemes, Veronika, 2012. "Stars and standards: Energy efficiency in rental markets," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 153-168.
    6. Jade Wong & Andreas Ortman & Alberto Motta & Le Zhang, 2013. "Understanding Social Impact Bonds and Their Alternatives: An Experimental Investigation," Discussion Papers 2013-21, School of Economics, The University of New South Wales.
    7. Gilles Grolleau & Martin G. Kocher & Angela Sutan, 2014. "Cheating and Loss Aversion: Do People Lie More to Avoid a Loss?," CESifo Working Paper Series 4965, CESifo Group Munich.
    8. Rosenbaum, Stephen Mark & Billinger, Stephan & Stieglitz, Nils, 2014. "Let’s be honest: A review of experimental evidence of honesty and truth-telling," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 181-196.
    9. Friesen, Lana & Gangadharan, Lata, 2012. "Individual level evidence of dishonesty and the gender effect," Economics Letters, Elsevier, vol. 117(3), pages 624-626.

    More about this item

    Keywords

    Self-reporting; Enforcement; Dishonesty; Experiment; Individual decision making; Theft; Intrinsic motivation;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:94:y:2013:i:c:p:90-102. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/jebo .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.