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Breaking bad: Malfunctioning control institutions erode good behavior in a cheating game

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  • Hakimov, Rustamdjan
  • Kajackaite, Agne

Abstract

This paper studies whether malfunctioning (or unenforced) institutions erode good behavior. We use a large-scale online experiment, in which participants play a repeated observed cheating game. When we ask participants to report honestly and promise no control, we find low cheating rates. When control of truthful reporting is introduced, low cheating rates remain. In our main treatment with a malfunctioning institution, participants do not know whether they are in the treatment with or without control. In this treatment, participants who do not face control for some rounds start cheating significantly more often, reaching highest cheating rates. That is, a malfunctioning institution leads to more cheating than no institution at all, which indicates that the development of cheating behavior is endogenous to the institutions. Our findings suggest a novel negative effect of unenforced laws.

Suggested Citation

  • Hakimov, Rustamdjan & Kajackaite, Agne, 2024. "Breaking bad: Malfunctioning control institutions erode good behavior in a cheating game," Games and Economic Behavior, Elsevier, vol. 148(C), pages 162-178.
    • Handle: RePEc:eee:gamebe:v:148:y:2024:i:c:p:162-178
    DOI: 10.1016/j.geb.2024.09.005
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    More about this item

    Keywords

    Lying; Cheating; Institutions; Control; Crowding-out; Experiment;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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