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Pecunia Non Olet: on the Self-selection Into (Dis)honest Earning Opportunities

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  • Kai A. Konrad
  • Tim Lohse
  • Sven A. Simon

Abstract

We study self-selection into earning money in an honest or dishonest fashion based on individuals' attitudes toward truthful reporting. We propose a decision-theoretic framework where individuals' willingness to pay for honest earnings is determined by their (behavioral) lying costs. Our laboratory experiment identifies lying costs as the decisive factor causing self-selection into honest earning opportunities for individuals with high costs and into cheating opportunities for those prepared to misreport. Our experimental setup allows us to recover individual lying costs and their distribution in the population.

Suggested Citation

  • Kai A. Konrad & Tim Lohse & Sven A. Simon, 2020. "Pecunia Non Olet: on the Self-selection Into (Dis)honest Earning Opportunities," Working Papers tax-mpg-rps-2020-14_2, Max Planck Institute for Tax Law and Public Finance.
  • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2020-14_2
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    Cited by:

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    2. Charroin, Liza & Fortin, Bernard & Villeval, Marie Claire, 2022. "Peer effects, self-selection and dishonesty," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 618-637.
    3. Liza Charroin, 2018. "Homophily, peer effects and dishonesty," Post-Print halshs-01993618, HAL.
    4. Diogo Geraldes & Franziska Heinicke & Duk Gyoo Kim, 2022. "The Effect of Chosen or Given Luck on Honesty," CESifo Working Paper Series 9904, CESifo.
    5. Caliari, Daniele & Soraperra, Ivan, 2023. "Planning to cheat: Temptation and self-control," Discussion Papers, Research Unit: Market Behavior SP II 2023-205, WZB Berlin Social Science Center.

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    More about this item

    Keywords

    lying behavior; lying costs; misreporting; honest earnings; self-selection; laboratory experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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