IDEAS home Printed from
   My bibliography  Save this paper

Cheating in Labour Markets


  • Michalis Drouvelis
  • Martin G. Kocher


Our results from a laboratory experiment offer new evidence for the detrimental effects that cheating behaviour in the workplace may have on the degree of reciprocity between firms and workers. First, we replicate existing findings showing that in the absence of monitoring (cheating is possible) workers cheat on their actual performance in a real-effort task. The extent of cheating influences how firms (managers) decide to set their wages in a subsequent gift-exchange game. Specifically, firms offer higher wages to workers who cheat and interestingly, workers expect such behaviour by firms. These higher wages are not matched by workers’ performance in the gift-exchange game, where cheating is not possible, resulting in a flat wage-effort relationship. In contrast, in the presence of monitoring (cheating is not possible), we find a positive relationship between wages offered and effort provided by the workers. Our findings have implications for adopting measures at the workplace that eliminate workers’ opportunities to cheat on their performance.

Suggested Citation

  • Michalis Drouvelis & Martin G. Kocher, 2021. "Cheating in Labour Markets," CESifo Working Paper Series 8942, CESifo.
  • Handle: RePEc:ces:ceswps:_8942

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Johannes Abeler & Daniele Nosenzo & Collin Raymond, 2019. "Preferences for Truth‐Telling," Econometrica, Econometric Society, vol. 87(4), pages 1115-1153, July.
    2. Michael Kirchler & Jürgen Huber & Matthias Stefan & Matthias Sutter, 2016. "Market Design and Moral Behavior," Management Science, INFORMS, vol. 62(9), pages 2615-2625, September.
    3. 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.
    4. 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.
    5. Ben Greiner, 2015. "Subject pool recruitment procedures: organizing experiments with ORSEE," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 114-125, July.
    6. Martin G. Kocher & Simeon Schudy & Lisa Spantig, 2018. "I Lie? We Lie! Why? Experimental Evidence on a Dishonesty Shift in Groups," Management Science, INFORMS, vol. 64(9), pages 3995-4008, September.
    7. Martin Brown & Armin Falk & Ernst Fehr, 2004. "Relational Contracts and the Nature of Market Interactions," Econometrica, Econometric Society, vol. 72(3), pages 747-780, May.
    8. Englmaier, Florian & Strasser, Sebastian & Winter, Joachim, 2014. "Worker characteristics and wage differentials: Evidence from a gift-exchange experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 185-203.
    9. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    10. Uri Gneezy & John A List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," Econometrica, Econometric Society, vol. 74(5), pages 1365-1384, September.
    11. Klimm, Felix, 2019. "Suspicious success - Cheating, inequality acceptance, and political preferences," Munich Reprints in Economics 78232, University of Munich, Department of Economics.
    12. Armin Falk, 2007. "Gift Exchange in the Field," Econometrica, Econometric Society, vol. 75(5), pages 1501-1511, September.
    13. Sebastian Kube & Michel Andre Marechal & Clemens Puppe, 2012. "The Currency of Reciprocity: Gift Exchange in the Workplace," American Economic Review, American Economic Association, vol. 102(4), pages 1644-1662, June.
    14. 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.
    15. Robert Dur, 2009. "Gift Exchange in The Workplace: Money or Attention?," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 550-560, 04-05.
    16. 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.
    17. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    18. Bellemare, Charles & Shearer, Bruce, 2009. "Gift giving and worker productivity: Evidence from a firm-level experiment," Games and Economic Behavior, Elsevier, vol. 67(1), pages 233-244, September.
    19. Klimm, Felix, 2019. "Suspicious success – Cheating, inequality acceptance, and political preferences," European Economic Review, Elsevier, vol. 117(C), pages 36-55.
    20. Fehr, Ernst & Kirchler, Erich & Weichbold, Andreas & Gächter, Simon, 1998. "When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 324-351, April.
    21. 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)

    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. Blumkin, Tomer & Pinhas, Haim & Zultan, Ro’i, 2020. "Wage Subsidies and Fair Wages," European Economic Review, Elsevier, vol. 127(C).
    2. Khalmetski, Kiryl & Rockenbach, Bettina & Werner, Peter, 2017. "Evasive lying in strategic communication," Journal of Public Economics, Elsevier, vol. 156(C), pages 59-72.
    3. Gagnon, Nickolas & Noussair, C., 2016. "Does Reciprocity Persist Over Time?," Research Memorandum 033, Maastricht University, Graduate School of Business and Economics (GSBE).
    4. Johannes Becker & Daniel Hopp & Karolin Süß, 2020. "How Altruistic Is Indirect Reciprocity? - Evidence from Gift-Exchange Games in the Lab," CESifo Working Paper Series 8423, CESifo.
    5. Gächter, Simon & Kaiser, Esther & Königstein, Manfred, 2024. "Incentive Contracts Crowd Out Voluntary Cooperation: Evidence from Gift-Exchange Experiments," IZA Discussion Papers 16872, Institute of Labor Economics (IZA).
    6. Simon Gächter & Esther Kaiser & Manfred Königstein, 2024. "Incentive contracts crowd out voluntary cooperation: Evidence from gift-exchange experiments," Discussion Papers 2024-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    7. Vera Angelova & Tobias Regner, 2012. "Do voluntary payments to advisors improve the quality of financial advice? An experimental sender-receiver game," Jena Economics Research Papers 2012-011, Friedrich-Schiller-University Jena.
    8. Hermann, Daniel & Mußhoff, Oliver, 2019. "I might be a liar, but I am not a thief: An experimental distinction between the moral costs of lying and stealing," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 135-139.
    9. Astrid Dannenberg & Elina Khachatryan, 2020. "A Comparison of Individual and Group Behavior in a Competition with Cheating Opportunities," MAGKS Papers on Economics 202003, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    10. Dannenberg, Astrid & Khachatryan, Elina, 2020. "A comparison of individual and group behavior in a competition with cheating opportunities," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 533-547.
    11. Faralla, Valeria & Borà, Guido & Innocenti, Alessandro & Novarese, Marco, 2020. "Promises in group decision making," Research in Economics, Elsevier, vol. 74(1), pages 1-11.
    12. Sliwka, Dirk & Werner, Peter, 2016. "How Do Agents React to Dynamic Wage Increases? An Experimental Study," IZA Discussion Papers 9855, Institute of Labor Economics (IZA).
    13. Christian Schitter & Jürgen Fleiß & Stefan Palan, 2017. "To claim or not to claim: Anonymity, reciprocal externalities and honesty," Working Paper Series, Social and Economic Sciences 2017-01, Faculty of Social and Economic Sciences, Karl-Franzens-University Graz.
    14. Galeotti, Fabio & Kline, Reuben & Orsini, Raimondello, 2017. "When foul play seems fair: Exploring the link between just deserts and honesty," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 451-467.
    15. Buckle, Georgia E. & Füllbrunn, Sascha & Luhan, Wolfgang J., 2021. "Lying for others: The impact of agency on misreporting," Economics Letters, Elsevier, vol. 198(C).
    16. Lohse, Tim & Simon, Sven A. & Konrad, Kai A., 2018. "Deception under time pressure: Conscious decision or a problem of awareness?," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 31-42.
    17. 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.
    18. 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.
    19. Simon Gächter & Daniele Nosenzo & Martin Sefton, 2012. "The Impact of Social Comparisons on Reciprocity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1346-1367, December.
    20. Kocher, Martin G. & Luhan, Wolfgang J. & Sutter, Matthias, 2012. "Testing a forgotten aspect of Akerlof’s gift exchange hypothesis: Relational contracts with individual and uniform wages," Discussion Papers in Economics 12816, University of Munich, Department of Economics.

    More about this item


    cheating; gift-exchange; labour market; experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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:ces:ceswps:_8942. See general information about how to correct material in RePEc.

    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: Klaus Wohlrabe (email available below). General contact details of provider: .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.