Negative Economic Shocks and the Compliance to Social Norms

Francesco Bogliacino, Rafael Alberto Charris, Camilo Gómez Cangrejo and Felipe Montealegre ()
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Rafael Alberto Charris: Universidad Nacional de Colombia

No 285tv, SocArXiv from Center for Open Science

Abstract: This paper is about why suffering a Negative Economic Shock, i.e. a large loss, may trigger a change in behavior. We conjecture that people trade off a concern for money with a conditional preference to follow social norms, and that suffering a shock makes the first motivation more salient, leading to more norm violation. We study this question experimentally: After administering losses on the earnings from a Real Effort Task, we elicit decisions in set of pro-social and anti-social settings. To derive our predictions, we elicit social norms separately from behavior. We find that a shock increases deviations from norms in antisocial settings — more subjects cheat, steal, and avoid retaliation, with changes that are economically large. This is in line with our prediction. The effect on trust and cooperation is instead more ambiguous. Finally, we conducted an additional experiment to study the difference between an intentional shock and a random shock in a trust game. We found that the two induce partially different effects and that victims of intentional losses are more sensible to the in-group belief. This may explain why part of the literature studying shocks in natural settings found an increase in pro-social behavior, contrary to our prediction.

Date: 2021-11-15
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-lam
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Citations: View citations in EconPapers (3)

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Journal Article: Negative economic shocks and the compliance to social norms (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:285tv

DOI: 10.31219/osf.io/285tv

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