IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v59y2013i10p2187-2203.html
   My bibliography  Save this article

License to Cheat: Voluntary Regulation and Ethical Behavior

Author

Listed:
  • Francesca Gino

    (Negotiation, Organizations and Markets Unit, Harvard Business School, Harvard University, Boston, Massachusetts 02163)

  • Erin L. Krupka

    (School of Information, University of Michigan, Ann Arbor, Michigan 48109)

  • Roberto A. Weber

    (Department of Economics, University of Zurich, CH-8006 Zurich, Switzerland)

Abstract

Although monitoring and regulation can be used to combat socially costly unethical conduct, their intended targets can often avoid regulation or hide their behavior. This surrenders at least part of the effectiveness of regulatory policies to firms' and individuals' decisions to voluntarily submit to regulation. We study individuals' decisions to avoid monitoring or regulation and thus enhance their ability to engage in unethical conduct. We conduct a laboratory experiment in which participants engage in a competitive task and can decide between having the opportunity to misreport their performance or having their performance verified by an external monitor. To study the effect of social factors on the willingness to be subject to monitoring, we vary whether participants make this decision simultaneously with others or sequentially, as well as whether the decision is private or public. Our results show that the opportunity to avoid being submitted to regulation produces more unethical conduct than situations in which regulation is either exogenously imposed or entirely absent. This paper was accepted by Uri Gneezy, behavioral economics.

Suggested Citation

  • Francesca Gino & Erin L. Krupka & Roberto A. Weber, 2013. "License to Cheat: Voluntary Regulation and Ethical Behavior," Management Science, INFORMS, vol. 59(10), pages 2187-2203, October.
  • Handle: RePEc:inm:ormnsc:v:59:y:2013:i:10:p:2187-2203
    DOI: 10.1287/mnsc.1120.1699
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.1120.1699
    Download Restriction: no

    File URL: https://libkey.io/10.1287/mnsc.1120.1699?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Hans P. Binswanger, 1980. "Attitudes Toward Risk: Experimental Measurement in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 395-407.
    3. Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-555, March.
    4. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
    5. Rigdon, Mary & Ishii, Keiko & Watabe, Motoki & Kitayama, Shinobu, 2009. "Minimal social cues in the dictator game," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 358-367, June.
    6. Bicchieri, Cristina & Erte, Xiao, 2007. "Do the right thing: But only if others do so," MPRA Paper 4609, University Library of Munich, Germany.
    7. Jeffrey Carpenter & Peter Hans Matthews & John Schirm, 2010. "Tournaments and Office Politics: Evidence from a Real Effort Experiment," American Economic Review, American Economic Association, vol. 100(1), pages 504-517, March.
    8. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    9. Matthew Ellman & Paul Pezanis-Christou, 2010. "Organizational Structure, Communication, and Group Ethics," American Economic Review, American Economic Association, vol. 100(5), pages 2478-2491, December.
    10. Rajna Gibson & Carmen Tanner & Alexander F. Wagner, 2013. "Preferences for Truthfulness: Heterogeneity among and within Individuals," American Economic Review, American Economic Association, vol. 103(1), pages 532-548, February.
    11. Matthias Sutter, 2009. "Deception Through Telling the Truth?! Experimental Evidence From Individuals and Teams," Economic Journal, Royal Economic Society, vol. 119(534), pages 47-60, January.
    12. Krupka, Erin & Weber, Roberto A., 2009. "The focusing and informational effects of norms on pro-social behavior," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 307-320, June.
    13. Rema Hanna, 2010. "US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 158-189, July.
    14. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    15. Schwieren, Christiane & Weichselbaumer, Doris, 2010. "Does competition enhance performance or cheating? A laboratory experiment," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 241-253, June.
    16. Muriel Niederle & Lise Vesterlund, 2007. "Do Women Shy Away From Competition? Do Men Compete Too Much?," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1067-1101.
    17. Mead, N.L. & Baumeister, R.F. & Gino, F. & Schweitzer, M.E. & Ariely, D., 2009. "Too tired to tell the truth : Self-control resource depletion and dishonesty," Other publications TiSEM c60167a3-c3aa-4b83-9192-1, Tilburg University, School of Economics and Management.
    18. Anna Dreber & Emma Essen & Eva Ranehill, 2011. "Outrunning the gender gap—boys and girls compete equally," Experimental Economics, Springer;Economic Science Association, vol. 14(4), pages 567-582, November.
    19. repec:clg:wpaper:2008-02 is not listed on IDEAS
    20. Stephen V. Burks & Erin L. Krupka, 2012. "A Multimethod Approach to Identifying Norms and Normative Expectations Within a Corporate Hierarchy: Evidence from the Financial Services Industry," Management Science, INFORMS, vol. 58(1), pages 203-217, January.
    21. Schminke, Marshall & Ambrose, Maureen L. & Neubaum, Donald O., 2005. "The effect of leader moral development on ethical climate and employee attitudes," Organizational Behavior and Human Decision Processes, Elsevier, vol. 97(2), pages 135-151, July.
    22. Roland G. Fryer & Steven D. Levitt, 2010. "An Empirical Analysis of the Gender Gap in Mathematics," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 210-240, April.
    23. Melissa Bateson & Daniel Nettle & Gilbert Roberts, 2006. "Cues of being watched enhance cooperation in a real-world setting," Natural Field Experiments 00214, The Field Experiments Website.
    24. Ausubel, Lawrence M, 1991. "The Failure of Competition in the Credit Card Market," American Economic Review, American Economic Association, vol. 81(1), pages 50-81, March.
    25. Lamar Pierce & Jason Snyder, 2008. "Ethical Spillovers in Firms: Evidence from Vehicle Emissions Testing," Management Science, INFORMS, vol. 54(11), pages 1891-1903, November.
    26. Daniel S. Nagin & James B. Rebitzer & Seth Sanders & Lowell J. Taylor, 2002. "Monitoring, Motivation, and Management: The Determinants of Opportunistic Behavior in a Field Experiment," American Economic Review, American Economic Association, vol. 92(4), pages 850-873, September.
    27. John R. Hamman & George Loewenstein & Roberto A. Weber, 2010. "Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship," American Economic Review, American Economic Association, vol. 100(4), pages 1826-1846, September.
    28. Benjamin A. Olken, 2007. "Monitoring Corruption: Evidence from a Field Experiment in Indonesia," Journal of Political Economy, University of Chicago Press, vol. 115, pages 200-249.
    29. repec:feb:natura:0059 is not listed on IDEAS
    30. Treviño, Linda Klebe & Weaver, Gary R. & Brown, Michael E., 2008. "It’s Lovely at the Top: Hierarchical Levels, Identities, and Perceptions of Organizational Ethics," Business Ethics Quarterly, Cambridge University Press, vol. 18(2), pages 233-252, April.
    31. Shalvi, Shaul & Dana, Jason & Handgraaf, Michel J.J. & De Dreu, Carsten K.W., 2011. "Justified ethicality: Observing desired counterfactuals modifies ethical perceptions and behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 115(2), pages 181-190, July.
    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. Jantsje M. Mol & Eline C. M. Heijden & Jan J. M. Potters, 2020. "(Not) alone in the world: Cheating in the presence of a virtual observer," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 961-978, December.
    2. Daniel Houser & John List & Marco Piovesan & Anya Samek & Joachim Winter, 2015. "On the Origins of Dishonesty: from Parents to Children," Artefactual Field Experiments 00449, The Field Experiments Website.
    3. Corgnet, Brice & Martin, Ludivine & Ndodjang, Peguy & Sutan, Angela, 2019. "On the merit of equal pay: Performance manipulation and incentive setting," European Economic Review, Elsevier, vol. 113(C), pages 23-45.
    4. Houser, Daniel & List, John A. & Piovesan, Marco & Samek, Anya & Winter, Joachim, 2016. "Dishonesty: From parents to children," European Economic Review, Elsevier, vol. 82(C), pages 242-254.
    5. Pate, Jennifer, 2018. "Temptation and cheating behavior: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 67(C), pages 135-148.
    6. Sanjit Dhami, 2017. "Human Ethics and Virtues: Rethinking the Homo-Economicus Model," CESifo Working Paper Series 6836, CESifo.
    7. Lohse, Tim & Dwenger, Nadja, 2016. "Do Individuals Put Effort into Lying? Evidence From a Compliance Experiment," VfS Annual Conference 2016 (Augsburg): Demographic Change 145616, Verein für Socialpolitik / German Economic Association.
    8. Glenn Dutcher & Daniela Glätzle-Rützler & Dmitry Ryvkin, 2016. "Don't hate the player, hate the game: Uncovering the foundations of cheating in contests," Working Papers 2016-29, Faculty of Economics and Statistics, University of Innsbruck.
    9. Meier, Kristina & Niessen-Ruenzi, Alexandra & Ruenzi, Stefan, 2018. "The impact of role models on women's self-selection in competitive environments," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181589, Verein für Socialpolitik / German Economic Association.
    10. Gibson, Rajna & Tanner, Carmen & Wagner, Alexander F, 2014. "The Choice of Honesty: An Experiment Regarding Heterogeneous Responses to Situational Social Norms," CEPR Discussion Papers 9880, C.E.P.R. Discussion Papers.
    11. Tim Lohse & Salmai Qari, 2019. "Gender Differences in Face-to-Face Deceptive Behavior," CESifo Working Paper Series 7995, CESifo.
    12. Vranka, Marek & Frollová, Nikola & Pour, Marek & Novakova, Julie & Houdek, Petr, 2019. "Cheating customers in grocery stores: A field study on dishonesty," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 83(C).
    13. Subhasish M. Chowdhury & Joo Young Jeon & Chulyoung Kim & Sang-Hyun Kim, 2021. "Gender Differences in Repeated Dishonest Behavior: Experimental Evidence," Games, MDPI, Open Access Journal, vol. 12(2), pages 1-11, May.
    14. Despoina Alempaki & Gönül Doğan & Silvia Saccardo, 2019. "Deception and reciprocity," Experimental Economics, Springer;Economic Science Association, vol. 22(4), pages 980-1001, December.
    15. Sascha Behnk & Iván Barreda-Tarrazona & Aurora García-Gallego, 2017. "An experimental test of reporting systems for deception," Working Papers 2017/11, Economics Department, Universitat Jaume I, Castellón (Spain).
    16. Kristen Bell DeTienne & Carol Frogley Ellertson & Marc-Charles Ingerson & William R. Dudley, 2021. "Moral Development in Business Ethics: An Examination and Critique," Journal of Business Ethics, Springer, vol. 170(3), pages 429-448, May.
    17. Lohse, Tim & Qari, Salmai, 2021. "Gender differences in face-to-face deceptive behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 1-15.
    18. Irlenbusch, Bernd & Mussweiler, Thomas & Saxler, David J. & Shalvi, Shaul & Weiss, Alexa, 2020. "Similarity increases collaborative cheating," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 148-173.
    19. Peter M. Madsen & Vinit Desai, 2018. "No Firm Is an Island: The Role of Population-Level Actors in Organizational Learning from Failure," Organization Science, INFORMS, vol. 29(4), pages 739-753, August.
    20. Petr Houdek & Štěpán Bahník & Marek Hudík & Marek Vranka, 2021. "Selection effects on dishonest behavior," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(2), pages 238-266, March.
    21. Behnk, Sascha & Barreda-Tarrazona, Iván & García-Gallego, Aurora, 2019. "Deception and reputation – An experimental test of reporting systems," Journal of Economic Psychology, Elsevier, vol. 71(C), pages 37-58.
    22. Akın, Zafer, 2019. "Dishonesty, social information, and sorting," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 80(C), pages 199-210.
    23. Dwenger, Nadja & Lohse, Tim, 2019. "Do individuals successfully cover up their lies? Evidence from a compliance experiment," Journal of Economic Psychology, Elsevier, vol. 71(C), pages 74-87.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sanjit Dhami, 2017. "Human Ethics and Virtues: Rethinking the Homo-Economicus Model," CESifo Working Paper Series 6836, CESifo.
    2. Corgnet, Brice & Martin, Ludivine & Ndodjang, Peguy & Sutan, Angela, 2019. "On the merit of equal pay: Performance manipulation and incentive setting," European Economic Review, Elsevier, vol. 113(C), pages 23-45.
    3. 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.
    4. Gill, David & Prowse, Victoria & Vlassopoulos, Michael, 2013. "Cheating in the workplace: An experimental study of the impact of bonuses and productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 120-134.
    5. Dugar, Subhasish & Mitra, Arnab & Shahriar, Quazi, 2019. "Deception: The role of uncertain consequences," European Economic Review, Elsevier, vol. 114(C), pages 1-18.
    6. Pate, Jennifer, 2018. "Temptation and cheating behavior: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 67(C), pages 135-148.
    7. Jeroen Ven & Marie Claire Villeval, 2015. "Dishonesty under scrutiny," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 86-99, July.
    8. Aksoy, Billur & Palma, Marco A., 2019. "The effects of scarcity on cheating and in-group favoritism," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 100-117.
    9. Gneezy, Uri & Rockenbach, Bettina & Serra-Garcia, Marta, 2013. "Measuring lying aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 293-300.
    10. Benistant, Julien & Villeval, Marie Claire, 2019. "Unethical behavior and group identity in contests," Journal of Economic Psychology, Elsevier, vol. 72(C), pages 128-155.
    11. Xiao, Erte, 2017. "Justification and conformity," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 15-28.
    12. Nicolas Jacquemet & Stéphane Luchini & Julie Rosaz & Jason F. Shogren, 2019. "Truth Telling Under Oath," Management Science, INFORMS, vol. 65(1), pages 426-438, January.
    13. Zhixin Dai & Fabio Galeotti & Marie Claire Villeval, 2018. "Cheating in the Lab Predicts Fraud in the Field: An Experiment in Public Transportation," Management Science, INFORMS, vol. 64(3), pages 1081-1100, March.
    14. Mitra, Arnab & Shahriar, Quazi, 2020. "Why is dishonesty difficult to mitigate? The interaction between descriptive norm and monetary incentive," Journal of Economic Psychology, Elsevier, vol. 80(C).
    15. Baul, Tushi, 2013. "Self-selection and peer-effects in experimental labor markets," ISU General Staff Papers 201301010800004327, Iowa State University, Department of Economics.
    16. Nadine Chlaß & Gerhard Riener, 2015. "Lying, Spying, Sabotaging: Procedures and Consequences," Jena Economic Research Papers 2015-016, Friedrich-Schiller-University Jena.
    17. Faravelli, Marco & Friesen, Lana & Gangadharan, Lata, 2015. "Selection, tournaments, and dishonesty," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 160-175.
    18. Agnes Bäker & Mario Mechtel, 2019. "The Impact Of Peer Presence On Cheating," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 792-812, April.
    19. Behnk, Sascha & Barreda-Tarrazona, Iván & García-Gallego, Aurora, 2014. "The role of ex post transparency in information transmission—An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 101(C), pages 45-64.
    20. Conrads, Julian & Irlenbusch, Bernd & Rilke, Rainer Michael & Schielke, Anne & Walkowitz, Gari, 2014. "Honesty in tournaments," Economics Letters, Elsevier, vol. 123(1), pages 90-93.

    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:inm:ormnsc:v:59:y:2013:i:10:p:2187-2203. 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: . General contact details of provider: https://edirc.repec.org/data/inforea.html .

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Matthew Walls (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    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.