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A Multimethod Approach to Identifying Norms and Normative Expectations Within a Corporate Hierarchy: Evidence from the Financial Services Industry

  • Stephen V. Burks

    ()

    (Division of Social Science, University of Minnesota, Morris, Morris, Minnesota 56267; Institute for the Study of Labor (IZA), D-53113 Bonn, Germany; and Centre for Decision Research and Experimental Economics (CeDEx), University of Nottingham, Nottingham NG7 2RD, United Kingdom)

  • Erin L. Krupka

    ()

    (School of Information, University of Michigan, Ann Arbor, Michigan 48109; and Institute for the Study of Labor (IZA), D-53113 Bonn, Germany)

We use an incentive-compatible economic experiment and surveys in the field at a large financial services firm to identify the norms for on-the-job behavior among financial advisers and their leaders, and the normative expectations each group has of the other. We examine whistle-blowing on a peer, an incentive clash between serving the client and earning commissions, and a dilemma about fiduciary responsibility to a client. We find patterns of agreement among advisers, among leaders, and between the two groups, that are consistent with company guidelines identified ex ante. However, we also find measurable differences between what leaders expect and the actual norms of advisers. When there is such a mismatch we are able to distinguish miscommunication from ethical disagreement between leaders and advisers. Finally, we show that when advisers' personal ethical opinions do not match group norms, this mismatch is correlated with job dissatisfaction and lying for money in a second experiment. This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.

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Article provided by INFORMS in its journal Management Science.

Volume (Year): 58 (2012)
Issue (Month): 1 (January)
Pages: 203-217

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Handle: RePEc:inm:ormnsc:v:58:y:2012:i:1:p:203-217
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