Self-esteem, Moral Capital, and Wrongdoing
In order to help understand adherence to moral standards and the force of intrinsic motivation, we present an infinite-horizon model where an individual receives random temptations (such as bribe offers) and must decide which to resist. Temptations yield consumption value, but keeping a good self-image (a high belief of being the type of person that resists) yields self-esteem. Individual actions depend both on types and intent, so selecting a good intent does not guarantee good behavior and past resistance is informative of a good type. We identify conditions for individuals to build an introspective reputation for goodness ("moral capital") and for good actions to lead to a stronger disposition to do good. Bad actions destroy moral capital and lock-in further wrongdoing. Economic shocks that result in higher temptations have persistent effects on wrongdoing that fade only as new generations replace the shocked cohorts. Societies with the same moral fundamentals may display different wrongdoing rates depending on how much past luck has polarized the distribution of individual beliefs. The model helps rationalize taboos, harsher punishment of repeat offenders, and a tendency of individuals with low moral capital to enter high-temptation activities.
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