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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?," ECON - Working Papers 167, Department of Economics - University of Zurich.
  • Handle: RePEc:zur:econwp:167
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    File URL: http://www.econ.uzh.ch/static/wp/econwp167.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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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Do leaders affect ethical conduct?
      by Alessandro Cerboni in Knowledge Team on 2014-08-15 02:04:11

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    Cited by:

    1. 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.
    2. Simon Gaechter & Elke Renner, 2014. "Leaders as Role Models for the Voluntary Provision of Public Goods," CESifo Working Paper Series 5049, CESifo Group Munich.
    3. 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).
    4. 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).
    5. Johannes Abeler & Daniele Nosenzo & Collin Raymond, 2019. "Preferences for Truth‐Telling," Econometrica, Econometric Society, vol. 87(4), pages 1115-1153, July.
    6. Gächter, Simon & Renner, Elke, 2018. "Leaders as role models and ‘belief managers’ in social dilemmas," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 321-334.
    7. Bahbouhi, Jalal Eddine & Moussa, Najem, 2019. "A graph-based model for public goods with leaderships," Applied Mathematics and Computation, Elsevier, vol. 349(C), pages 53-61.
    8. 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).
    9. Houxue Xia & Qingmei Tan & Junhong Bai, 2018. "Corruption and Technological Innovation in Private Small-Medium Scale Companies: Does Female Top Management Play a Role?," Sustainability, MDPI, Open Access Journal, vol. 10(7), pages 1-18, June.
    10. Élisabeth Tovar & Matthieu Bunel, 2019. "Profit vs morality: how unfair is labor market discrimination? Results from a survey experiment," EconomiX Working Papers 2019-25, University of Paris Nanterre, EconomiX.
    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).
    12. 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.

    More about this item

    Keywords

    Leadership; ethics; dishonesty; experiment;

    JEL classification:

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

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