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Do Leaders Affect Ethical Conduct?

Author

Listed:
  • Giovanna d'Adda
  • Donja Darai
  • Roberto A. Weber

Abstract

We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct—prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders’ strategies reveals that leaders’ statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders’ propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.

Suggested Citation

  • Giovanna d'Adda & Donja Darai & Roberto A. Weber, 2014. "Do Leaders Affect Ethical Conduct?," CESifo Working Paper Series 4913, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4913
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp4913.pdf
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    References listed on IDEAS

    as
    1. Conrads, Julian & Irlenbusch, Bernd & Rilke, Rainer Michael & Schielke, Anne & Walkowitz, Gari, 2014. "Honesty in tournaments," Economics Letters, Elsevier, vol. 123(1), pages 90-93.
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    Cited by:

    1. Christian Zehnder & Holger Herz & Jean-Philippe Bonardi, 2016. "A Productive Clash of Cultures: Injecting Economics into Leadership Research," CESifo Working Paper Series 6175, CESifo Group Munich.
    2. D'Adda, Giovanna & Dufwenberg, Martin & Passarelli, Francesco & Tabellini, Guido, 2019. "Partial Norms," CEPR Discussion Papers 13593, C.E.P.R. Discussion Papers.
      • Giovanna d’Adda & Martin Dufwenberg & Francesco Passarelli & Guido Tabellini, 2019. "Partial Norms," Working Papers 643, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
      • Giovanna D'Adda & Martin Dufwenberg & Francesco Passarelli & Guido Tabellini, 2019. "Partial Norms," CESifo Working Paper Series 7568, CESifo Group Munich.
    3. Gächter, Simon & Renner, Elke, 2014. "Leaders as Role Models for the Voluntary Provision of Public Goods," IZA Discussion Papers 8580, Institute of Labor Economics (IZA).
    4. repec:wly:emetrp:v:87:y:2019:i:4:p:1115-1153 is not listed on IDEAS
    5. Amadou Boly & Robert Gillanders & Topi Miettinen, 2016. "Deterrence, peer effect, and legitimacy in anti-corruption policy-making: An experimental analysis," WIDER Working Paper Series 137, World Institute for Development Economic Research (UNU-WIDER).
    6. Johannes Abeler & Daniele Nosenzo & Collin Raymond, 2019. "Preferences for Truth‐Telling," Econometrica, Econometric Society, vol. 87(4), pages 1115-1153, July.
    7. repec:eee:jeborg:v:154:y:2018:i:c:p:321-334 is not listed on IDEAS
    8. repec:eee:apmaco:v:349:y:2019:i:c:p:53-61 is not listed on IDEAS
    9. Boly, Amadou & Gillanders, Robert, 2017. "Effective anti-corruption policy-making: What can we learn from experimental economics?," PEGNet Policy Briefs 9/2017, PEGNet - Poverty Reduction, Equity and Growth Network, Kiel Institute for the World Economy (IfW).
    10. repec:gam:jsusta:v:10:y:2018:i:7:p:2252-:d:155366 is not listed on IDEAS
    11. Daniel Herold, 2017. "Compliance Programs, Signaling and Firms' Internal Coordination," MAGKS Papers on Economics 201749, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item

    Keywords

    leadership; ethics; dishonesty; experiment;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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