Fraud Deterrence Institutions Reduce Intrinsic Honesty

Fabio Galeotti, Valeria Maggian and Marie Claire Villeval

No 13977, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Deterrence institutions are widely used in modern societies to discourage rule violations but whether they have an impact beyond their immediate scope of application is usually ignored. Using a quasi-experiment, we found evidence of spillover effects across contexts. We identified fraudsters and non-fraudsters on public transport who were or not exposed to ticket inspections by the transport company. We then measured the intrinsic honesty of the same persons in a new, unrelated context where they could misappropriate money. Instead of having an expected educative effect across contexts, the exposure to deterrence practices increased unethical behavior of fraudsters but also, strikingly, of non-fraudsters, especially when inspection teams were larger. Learning about the prevailing norm is the most likely channel of this spillover effect.

Keywords: deterrence institutions; intrinsic honesty; spillovers; quasi-experiment (search for similar items in EconPapers)
JEL-codes: C93 D02 D91 K42 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2020-12
New Economics Papers: this item is included in nep-evo, nep-exp and nep-law
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Published - revised version published in: Economic Journal , 2021, 131 (638), 2508-2528.

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https://docs.iza.org/dp13977.pdf (application/pdf)

Related works:
Journal Article: Fraud Deterrence Institutions Reduce Intrinsic Honesty (2021)
Working Paper: Fraud Deterrence Institutions Reduce Intrinsic Honesty (2021)
Working Paper: Fraud Deterrence Institutions Reduce Intrinsic Honesty (2020)
Working Paper: Fraud Deterrence Institutions Reduce Intrinsic Honesty (2020)
Working Paper: Fraud Deterrence Institutions Reduce Intrinsic Honesty (2019)
Working Paper: Fraud Deterrence Institutions Reduce Intrinsic Honesty (2019)
Working Paper: Fraud Deterrence Institutions Reduce Intrinsic Honesty (2019)
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