Fairness as a constraint on trust in reciprocity: an experimental observation
In: Discussion Paper 439
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In: Discussion Paper 439
In: Management revue: socio-economic studies, Band 22, Heft 1, S. 28-46
ISSN: 1861-9908
In: Contributions to Economic Analysis; The Economics of Time Use, S. 175-203
In: dissertation.de 778
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Since 2001, when energy tycoon Enron and its auditor Arthur Andersen caused one of the biggest corporate scandals in the history of the U.S. economy due to a manipulation of Enrons balance sheets, Corporate Compliance instruments to prevent occupational fraud have been on the rise globally.As a result of even further corporate scandals in the following years, the U.S. government introduced various laws for companies doing business in or with the United States of America. These laws legally mandated e.g. the implementation of a host of internal controls to prevent and/or detect fraud. But despite the laws, various further big corporate scandals have erupted organizations, the media and the public over the last couple of years. To name only three: (1) the Libor manipulation at Deutsche Bank and other global banks in the finance industry of 2012, (2) the country-rigging scandal at the oil giant Petrobras in Brazil of 2014 or (3) the emissions scandal ("Dieselgate") scandal at Volkswagen and other global car manufactures of 2015. These above-mentioned corporate scandals are just three cases exemplifying that Corporate Compliance runs short on protecting companies and shareholders from self-seeking fraudsters because all of these aforementioned examples had compliance monitoring systems in place. Therefore, it is about time to rethink Corporate Compliance to prevent occupational fraud more effectively.This dissertation sets the ground for a behavior-oriented compliance (Behavioral Compliance) and aims at helping Corporate Compliance to be more effective in occupational fraud prevention and detection. But how? By taking a closer look at those people who (1) commit fraud (fraudsters, non-compliant) and (2) report fraud (whistleblowers, compliant). Learning about the motivation leading to their behavior will provide useful insights for fraud prevention and detection.
We investigate one possible explanation for observed rates of corrupt behavior namely that individual decision makers who frequently engage in illegal actions may underestimate the overall probability of being caught. This might in particular be true for petty corruption where small amounts of bribes are involved and the detection rate is rather low. To abstract from confounding effects of reciprocal behavior, we design an experiment where a public official decides upon accepting a bribe that leads to a higher present period income while facing the risk of being audited and being left with a considerable lower income in all subsequent periods. Because risk attitudes might differ when putting earned versus endowed income at risk, we compare treatments where participants either receive an endowment beforehand, or earn their income by conducting a real effort task in every period. Independent of the treatments we already find high rates of corruption in very early periods. Risk attitudes measured with a subsequent lottery-choice experiment do not correlate with the behavior observed in the corruption experiment. We explain our findings by a systematic underestimation of the overall probability of being audited. Although detection probability is small in each period, the probability of being caught only once is substantially high when engaging in corrupt behavior on a regular basis. Our findings have important political implications because the underestimation of the total risk involved in engaging in corrupt behavior might nullify measures to fight petty corruption by increased governmental auditing.
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We investigate one possible explanation for corrupt behavior namely that individual decision makers who engage frequently in illegal actions might underestimate the overall probability of being caught. This might be in particular true for petty corruption where small amounts of bribes are involved and detection rate is rather low. To abstract from confounding effects of reciprocal behavior we design an experiment where a public official decides upon accepting a bribe that leads to a higher present period income while facing the risk of being audited and left with a considerable lower income in all subsequent periods. Because risk attitudes might be different when putting earned versus endowed income at risk we compare treatments where participants either receive an endowment beforehand or earn their income by conducting a real effort task in every period. Independent of the treatments we already find high rates of corruption in very early periods. Risk attitudes measured with a subsequent lottery-choice experiment do not correlate with the behavior observed in the corruption experiment. We explain our findings by a systematic underestimation of the overall probability to be audited. Although detection probability is small in each period, the probability of being caught only once is substantially high when engaging in corrupt behavior on a regular basis. Our findings have important political implications because the underestimation of the total risk involved in engaging in corrupt behaviour might nullify measures to fight petty corruption by increased governmental auditing.
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The development and design of financial incentiveschemes as a sustainable and cost-effectiveintervention strategy to foster effectiveness ofmedical interventions remains a significantchallenge in health care delivery.Based on the findings of the conceptual model ofmedical non-persistence we test three differentfinancial incentive schemes. These incentives arederived upon concepts of behavioral economics, inparticular mental accounting, prospect theory andchoice bracketing, and incorporated into deposit,copayment and bonus schemes. We conductrandomized laboratory experiments to evaluate theperformance and effectiveness of each incentivescheme on persistence behavior under controlledconditions. Participants in the experiment arestudents remunerated according to theirperformance in the experiment.We find that financial incentive schemes based onthe principles of prospect theory significantlyimprove treatment persistence compared to thesituation where there are no incentives at all. Thisfinding implies that the simple but smart reallocationof co-payments and co-payment supportbetween the treatment initiation phase and treatmentmaintenance phase represents an effective way ofpromoting persistence behavior.This study delivers first applications of behavioralinterventions based on theoretical foundation. Usingthe method of experimental economics the studyserves as a first proof of concept of a scalable wayto design, calibrate and test the effectiveness offinancial incentives on behavioral change. Thisapproach is inevitable for broad application in realworld as it minimizes the need for patient researchwhile clarifying the impact of interventions undercontrolled conditions before these interventions getimplemented in the field. ; eng
"German and European immigration policies have only recently begun to cope with the inevitable: growing labor demand in the face of high unemployment and a shrinking labor force due to demographic change. Despite the implementation of Germany's first immigration act and several European initiatives towards legal harmonization at the EU level, an actively controlling immigration policy which would be needed to master the challenges ahead, is not yet in sight. Against this background, the book draws conclusions from the German history of immigration policy. It analyzes the country's future demand for immigration and develops an economic model for the effective selection and integration of labor migrants that could provide the foundation for a joint European immigration strategy."--Jacket