Negative Externalities of Cheating: An Experiment with Charities

Abstract

An extensive body of research investigates the emergence and characterization of dishonesty by means of the die-under-cup paradigm. However, most of the previous studies do not take into account the negative externalities of unethical behavior, since lying to increase the liar`s payoff only decreases the experimental budget. In this chapter, we experimentally investigate the effect of imposing negative externalities on a charity organization when cheating. In a sample composed by 192 students, comparison between our Baseline treatment and our Charity treatment reveals no significant difference on subjects` reporting decision. Our analysis does not provide any statistical support to the hypothesis that dishonest behavior may be lower when negative externalities associated with unethical behavior are affecting a charity organization rather than the experimental budget.