WWW.ABSTRACT.DISLIB.INFO
FREE ELECTRONIC LIBRARY - Abstracts, online materials
 
<< HOME
CONTACTS



Pages:     | 1 |   ...   | 2 | 3 || 5 | 6 |

«Forthcoming, American Economic Review Abstract We conduct an experiment assessing the extent to which people trade off the economic costs of ...»

-- [ Page 4 ] --

Expressive preferences have been experimentally documented to play a role in hypothetical choice situations, for example, by Feddersen, Gailmard, and Sandroni (2009). While, in the formulation of these authors, expressive preferences (EP) enter utility separably from economic costs, it is conceivable that EP also interact with incentives so that nonTo the extent that the PV survey implicitly measures EP, and separability arises.

conditional on the correctness of the statistical model’s specification, the results on the interaction term imply that EP may, in the range of economic stakes considered in this experiment, become more important in creating a difference in the perceived attractiveness This is as expected, given the setup of this experiment, and it suggests that the significance of 35HURTS in the earlier regressions stems from the fact that this variable (as well as the underlying social-preferences intensity of the individual) is correlated with intrinsic costs of lying. 35HURTS has a positive correlation with PV of 0.34. Within our experimental setup, we are unable to address any possible fundamental relationship between protected values and altruistic concerns, so we leave this to future research.

of truthfulness and lying as the stakes increase.19 Overall, the evidence available from this experiment does not allow us to discriminate definitively between EP and PV as possible sources of heterogeneity in agents’ lying behaviors. Additional factors relevant in the real world are also not addressed here. For example, intrinsic costs of lying may also be due to an internal reward mechanism for truthfulness that is activated when individuals are, for example, asked to recall the Ten Commandments or to sign an honor code (e.g. Mazar, Amir, and Ariely 2008).

D. Further results and robustness

Conceivably, participants may have worried about the wealth of the experimenters, which would show up in systematic variation in their choices in the effort task. But, there is no observable relationship between the participants’ levels of effort in that task and their PV, 35HURTS, or socially acceptable responding. This finding also confirms that the experimental design did not simply produce the same pattern of results in the truthtelling and the effort tasks. Moreover, our results are robust to controlling for investment experience, and to variations in samples and estimation methods. All these additional results are available upon request.

V. Conclusion

In this study, we examined individuals who were exposed to a simple, but realistic tradeoff: they could tell the truth and suffer economic costs of truthfulness, or they could lie and potentially incur intrinsic costs of lying. In our setting, there was no strategic incentive to tell the truth; the participants had no counterparty, no notion of a repeated game, no legal obligation, and no risk of being punished.

The experimental results unambiguously reject a type-based model. That is, the results refute Hypothesis TYP, that there exist only “the Ethical” (who care so much about the rightfulness of the process that they always tell the truth) and “the Economic” (who care only about their material payoffs and thus always lie when profitable). Instead, this paper Conceptually, EP may also be related to tendencies towards self-deception, though the previous results suggest that a standard measure of such tendencies does not explain behavior in this experiment.

supports Hypothesis HET, reflecting Gneezy’s (2005) conjecture of continuous heterogeneity of preferences for truthfulness: People balance process against consequences in a range of different ways. Moreover, we provide evidence that preferences for truthfulness are non-separable in intrinsic preferences and economic incentives. In sum, our findings point to heterogeneity, both among and within individuals, in their preferences for truthfulness.

This experiment cannot definitively identify the ultimate source(s) of the intrinsic costs of lying. Nor can it state whether the suggested preferences for truthfulness would also be at work at much higher stakes (as the protected-values explanation implies) or whether the validity of the results is limited to relatively low-stakes settings (as the expressivepreferences explanation suggests). Future research may be fruitfully conducted to answer these important questions.

To the extent that preferences for truthfulness apply in a wide range of settings, the results obtained in this study have implications regarding the effectiveness of methods to screen agents for their preferences for truthfulness, as well as implications for the optimal setting of incentive contracts.

References

Ariely, Dan; Anat Bracha and Stephan Meier. 2009. "Doing Good or Doing Well?

Image Motivation and Monetary Incentives in Behaving Prosocially " American Economic Review, 99(1): 544–55.

Baiman, Stanley and Barry L. Lewis. 1989. "An experiment testing the behavioral equivalence of strategically equivalent employment contracts." Journal of Accounting Research, 28(1): 1-20.

Baron, Jonathan and Mark Spranca. 1997. "Protected Values." Organizational Behavior and Human Decision Processes, 70(1): 1-16.

Bénabou, Roland and Jean Tirole. 2011. "Identity, Morals, and Taboos: Beliefs as Assets." Quarterly Journal of Economics, 126(2): 805-55.





Bergstresser, Daniel and Thomas Philippon. 2006. "CEO incentives and earnings management." Journal of Financial Economics, 80(3): 511-29.

Bhide, Amar and Howard H. Stevenson. 1990. "Why Be Honest if Honesty Doesn't Pay."

Harvard Business Review, 68(5): 121-29.

Bowles, Samuel and Sandra Polanía-Reyes. 2011. "Economic Incentives and Social Preferences: Substitutes or Complements?" Journal of Economic Literature, forthcoming.

Buchanan, James M. 1954. "Individual choice in voting and the market." Journal of Political Economy, 62: 334-43.

Charness, Gary and Martin Dufwenberg. 2006. "Promises and partnership."

Econometrica, 74(6): 1579-601.

Evans, John H.; R. Lynn Hannan; Ranjani Krishnan and Donald V. Moser. 2001.

"Honesty in managerial reporting." Accounting Review, 76(4): 537-59.

Feddersen, Timothy; Sean Gailmard and Alvaro Sandroni. 2009. "Moral bias in large elections: Theory and experimental evidence." American Political Science Review, 103(2): 175-91.

Fehr, Ernst and Urs Fischbacher. 2002. "Why social preferences matter." Economic Journal, 112(478): C1-C33.

____. 2003. "The nature of human altruism." Nature, 425(23 October 2003): 785-91.

Fehr, Ernst and Klaus Schmidt. 1999. "A theory of fairness, competition, and cooperation." Quarterly Journal of Economics, 114(3): 817-68.

Fischbacher, Urs and Franziska Heusi. 2008. "Lies in Disguise: An experimental study on cheating." Thurgau Institute of Economics and Department of Economics at the University of Konstanz Research Paper Series 40-2008.

Gneezy, Uri. 2005. "Deception: The role of consequences." American Economic Review, 95(1): 384-94.

Gneezy, Uri; Alex Imas and Kristóf Madarász. 2012. "Conscience Accounting:

Emotional Dynamics and Social Behavior." Working Paper.

Grover, Steven L. 2005. "The truth, the whole truth and nothing but the truth: The causes and management of workplace lying." Academy of Management Executive, 19(2): 148Healy, Paul M. and James M. Wahlen. 1999. "A review of the earnings management

literature and its implications for standard setting." Accounting Horizons, 13(October):

365-83.

Hurkens, Sjaak and Navin Kartik. 2009. "Would I lie to you? On social preferences and lying aversion." Experimental Economics, 12(2): 180-92.

King, Gary. 1998. Unifying Political Methodology. Ann Arbor: The University of Michigan Press.

Koford, Kenneth and Mark Penno. 1992. "Accounting, principal-agent theory, and selfinterested behavior." In Ethics and Agency Theory: An Introduction, Norman E. Bowie and R. Edward Freeman, New York: Oxford University Press.

Mazar, Nina; On Amir and Dan Ariely. 2008. "The dishonesty of honest people: A theory of self-concept maintenance." Journal of Marketing Research, XLV: 633-44.

Musch, Jochen; Robbi Brockhaus and Arndt Bröder. 2002. "Ein Inventar zur Erfassung von zwei Faktoren sozialer Erwünschtheit." Diagnostica, 48(3): 121-29.

Nelson, Mark W.; John A. Elliott and Robin L. Tarpley. 2003. "How are earnings managed? Examples from auditors." Accounting Horizons, 17(Supplement): 17-35.

Paulhus, Delroy. 1984. "Two-component models of socially desirable responding."

Journal of Personality and Social Psychology, 46: 598-609.

Rabin, Matthew. 1995. "Moral preferences, moral constraints, and self-serving biases."

Unpublished.

Rode, Julian. 2010. "Truth and trust in communication - Experiments on the effect of a competitive context." Games and Economic Behavior, 68: 325-38.

Sánchez-Pagés, Santiago and Marc Vorsatz. 2007. "An experimental study of truthtelling in a sender-receiver game." Games and Economic Behavior, 61: 86-112.

Sutter, Matthias. 2009. "Deception through telling the truth?! Experimental evidence from individuals and teams." Economic Journal, 119: 47-60.

Tanner, Carmen; Douglas L. Medin and Rumen Iliev. 2008. "Influence of deontological versus consequentialist orientations on act choices and framing effects: when principles

are more important than consequences." European Journal of Social Psychology, 38:

757-69.

Tanner, Carmen; Bettina Ryf and Martin Hanselmann. 2009. "Geschützte Werte Skala:

Konstruktion und erste Validierung eines Messinstrumentes (Protected Values Measure:

Construction and first validation of an instrument to assess protected values)."

Diagnostica, 55(3): 174-83.

Tetlock, Philip E.; Orie V. Kristel; S. Beth Elson; Melanie C. Green and Jennifer S.

Lerner. 2000. "The psychology of the unthinkable: Taboo Trade-Offs, Forbidden Base Rates, and Heretical Counterfactuals." Journal of Personality and Social Psychology, 78(5): 853-70.

Treviño, Linda K. and Michael E. Brown. 2004. "Managing to be ethical: Debunking five business ethics myths." Academy of Management Executive, 18(2): 69-81.

Tullock, Gordon. 1971. "The Charity of the Uncharitable." Western Economic Journal, 9:

379-92.

Wooldridge, Jeffrey M. 2006. Introductory Econometrics: A Modern Approach. Mason:

Thomson Higher Education.

Zak, Paul J. 2008. Moral markets: The critical role of values in the economy. Princeton and Oxford: Princeton University Press.

TABLES

Table I: Manipulation checks Participants answered questions that asked for their assessments of announcing 31 and 35 cents, respectively. These questions were on a -2 to +2 scale. After reordering (the direction of the scale varies between questions), a value of +2 indicates that the action was seen as honest, non-manipulative, associated with a personal financial loss, and based on a long-term view.

–  –  –

Table II: Behavior across economic costs of truthfulness This table presents the percentages of participants announcing 31 cents of earnings per share across the various economic cost of stating the truth (ECOST) conditions.

–  –  –

Table III: Determinants of earnings management behavior This table presents coefficients of logit regressions. The dependent variable is TRUTHFUL CHOICE. The explanatory variables are described in the text. Columns (1) to (4) use data from all ECOST situations. Column (5) omits the free truth (ECOST = CHF 0) situation.

Robust standard errors, obtained by clustering at the individual level, appear in parentheses below coefficient estimates. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

–  –  –

Table IV: Descriptive statistics of important explanatory variables This table presents descriptive statistics for our measure of altruistic concerns and for three candidate measures of intrinsic costs of lying. N = 261.

–  –  –

PARTICIPANTS

A total of 261 subjects (median age: 23 years) participated in this online experiment. We recruited participants from undergraduate classes at the University of Zurich (Switzerland). 50% of the participants were economics and finance students, 40% psychology students, and 10% students from other fields. 42% were women and 58% were men (distributed across the fields). Participants received a fixed amount as payment for their participation and an additional variable amount as compensation determined by their choices. Anonymity was ensured.1

PROCEDURE

All participants were first assured of anonymity throughout the experiment, then asked to respond to a few demographic questions and to read some basic instructions. They were informed that they would individually receive a payment, CHF 8, for their completed participation in the study, and an additional payment that depended on their choices.2 The participants then completed the main parts of the experiment: 1) the truthtelling task, 2) the effort task, and 3) the measurement of protected values. (These tasks were not labelled for the participants.) The experiment ended with some final questions serving mainly as control variables; then all the participants were paid. For simplicity, we describe the procedure for only one of the randomized orders of tasks. For both the truthtelling and the effort tasks, participants first were required to demonstrate their understanding of the tasks and of the rules of the experiment.

Most participants received payment one week after the experiment. For this purpose, each participant had received, before the experiment, a code, based on which the experimenter prepared an envelope containing the earnings.

Participants received the sealed envelopes by indicating their personal codes.

At the time of the experiment, the exchange rate was about US $1 = CHF 1.15.



Pages:     | 1 |   ...   | 2 | 3 || 5 | 6 |


Similar works:

«Negative investment in China: financing constraints and restructuring versus growth Sai Ding+* (University of Glasgow) Alessandra Guariglia (Durham University) and John Knight (University of Oxford) Abstract This paper attempts to address a puzzle in China’s investment pattern: despite high aggregate investment and remarkable economic growth, negative net investment is commonly found at the microeconomic level. Using a large firm-level dataset, we test three hypotheses to explain the...»

«Homo Oeconomicus 24(2): 255–268 (2007) www.accedoverlag.de The Potential of the Holler-Packel Value and Index: A New Characterization Ruxandra Haradau Institute of SocioEconomics, University of Hamburg, Germany (eMail: haradau@econ.uni-hamburg.de) Stefan Napel Department of Economics, University of Bayreuth, Germany (eMail: stefan.napel@uni-bayreuth.de) Abstract The Holler-Packel value and (non-normalized) index are given a new characterization by a potential function. The Holler-Packel...»

«Sermon #1365 Metropolitan Tabernacle Pulpit 1 THE TREES IN GOD’S COURTS NO. 1365 A SERMON DELIVERED BY C. H. SPURGEON, AT THE METROPOLITAN TABERNACLE, NEWINGTON. “Those that are planted in the house of the Lord shall flourish in the courts of our God. They shall still bring forth fruit in old age; they shall be fat and flourishing; to show that the Lord is upright; He is my rock, and there is no unrighteousness in Him.” Psalm 92:13-15. THESE verses occur at the close of a psalm for the...»

«Chapter Unethical Behaviour in the Dutch Financial Industry: an Empirical View Raymond Zaal and Ronald Jeurissen 106 Gorillas, Markets and the Search for Economic Values 11.1 Introduction Unethical behaviour has gained specific attention in the public debate about the causes of the financial crisis that began in 2007. This crisis has been blamed on a variety of factors and it is likely that its compound roots will be debated for decades to come. Among the multiple constituents identified as...»

«Course Work for Ph.D. in Management The Ph.D Course work for Management shall consist of Three papers, with two compulsory papers and one optional paper. The optional paper will be selected by the candidates out of four papers. The list of the papers for the course work is as under: Compulsory papers: Research Methodology in Management 2. Management Thought and Contemporary Management Theory Optional papers: Contemporary issues in Marketing Management 2) Contemporary issues in Finance and...»

«Chapter 12 Production and Cost 12.1 Economic Cost and Profit 1) Which of the following is a firm's fundamental goal?A) producing a quality product B) maximizing workforce job satisfaction C) improving society D) maximizing profits E) increasing its sales Answer: D Topic: Firm's goal Skill: Level 1: Definition Objective: Checkpoint 12.1 Author: TS 2) The fundamental goal of a firm is to A) produce a quality product. B) obtain the greatest market share. C) maximize profit. D) provide their...»

«Debt Relief Serkan Arslanalp and Peter Blair Henry∗ April 2006 Abstract The G-8 Multilateral Debt Relief Initiative (MDRI) is the next step of the Highly Indebted Poor Countries Initiative (HIPC). There are two reasons why MDRI is unlikely to help poor countries. First, the amount of money at stake is trivial. The roughly $2 billion of annual debt payments to be relieved under MDRI amounts to roughly 0.01 percent of the GDP of the OECD countries—a mere one-seventieth (1/70) of the quantity...»

«IFN Working Paper No. 765, 2008 Is Financial Risk-Taking Behavior Genetically Transmitted? David Cesarini, Magnus Johannesson, Paul Lichtenstein, Örjan Sandewall and Björn Wallace Research Institute of Industrial Economics P.O. Box 55665 SE-102 15 Stockholm, Sweden info@ifn.se www.ifn.se Is Financial Risk-Taking Behavior Genetically Transmitted? David Cesariniy Magnus Johannessonz Paul Lichtensteinx Örjan Sandewall{ Björn Wallacez September 22, 2008 Abstract In this paper, we use a sample...»

«UNIVERSITY OF ROCHESTER William E. Simon Graduate School of Business Administration FIN 532 Professor G. William Schwert Advanced Topics in Capital Markets CS 3-110L, 275-2470 Spring 2010 Fax: 461-5475 Email: schwert@schwert.ssb.rochester.edu Secretary: Kathleen Madsen CS3-110M, 585-275-8127 email: madsenka@simon.rochester.edu This course examines a variety of econometric methods for addressing substantively important questions in financial research. We will have one class meeting per week....»

«Meeting & Event Resource Guide Our goal is to be Best to Do Business With. There are various stages when we interact with you, the customer. They are: solicitation and marketing, sales and booking, preplanning, on-site and post-event. Through each of these stages, we focus on the following touch points: creativity, consistency, communication, flexibility and image. To aid you in the planning process, we have compiled the following hotel information. It is a pleasure to assist you with...»

«(Re)producing a periphery Popular representations of the Swedish North Madeleine Eriksson Kungliga Skytteanska Samfundet Department of Social and Economic Geography 901 87 Umeå Umeå 2010 Department of Social and Economic Geography Umeå University SE – 901 87 Umeå, Sweden Tel: +46 90 786 7152 Fax: +46 90 786 6359 GERUM – Kulturgeografi 2010:2 ISBN: 978-91-978344-3-8 ISSN: 1402-5205 http://www.geo.umu.se Elektronisk version tillgänglig på http://umu.diva-portal.org/ Kungliga Skytteanska...»

«Attachment 1 Case 1:95-cv-02301-EGS Document 248 Filed 08/15/12 Page 1 of 128 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) DYNALANTIC CORPORATION, ) ) Plaintiff, ) ) Civil Action No. 95-2301 (EGS) v. ) ) UNITED STATES DEPARTMENT ) OF DEFENSE, et al., ) ) Defendants. ) ) MEMORANDUM OPINION Plaintiff, the DynaLantic Corporation (“DynaLantic”), is a small business that designs and manufactures aircraft, submarine, ship, and other simulators and training equipment. Plaintiff has...»





 
<<  HOME   |    CONTACTS
2017 www.abstract.dislib.info - Abstracts, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.