IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/50166.html
   My bibliography  Save this paper

Cheating in the workplace: An experimental study of the impact of bonuses and productivity

Author

Listed:
  • Gill, David
  • Prowse, Victoria
  • Vlassopoulos, Michael

Abstract

We use an online real-effort experiment to investigate how bonus-based pay and worker productivity interact with workplace cheating. Firms often use bonus-based compensation plans, such as group bonuses and firm-wide profit sharing, that induce considerable uncertainty in how much workers are paid. Exposing workers to a compensation scheme based on random bonuses makes them cheat more but has no effect on their productivity. We also find that more productive workers behave more dishonestly. These results are consistent with workers’ cheating behavior responding to the perceived fairness of their employer’s compensation scheme.

Suggested Citation

  • Gill, David & Prowse, Victoria & Vlassopoulos, Michael, 2013. "Cheating in the workplace: An experimental study of the impact of bonuses and productivity," MPRA Paper 50166, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50166
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/50166/1/MPRA_paper_50166.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Gerald Eisenkopf & Ruslan Gurtoviy & Verena Utikal, 2011. "Size matters - when it comes to lies," IAAEG Discussion Papers until 2011 20110517, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. Curry Philip A. & Mongrain Steeve, 2009. "Deterrence in Rank-Order Tournaments," Review of Law & Economics, De Gruyter, vol. 5(1), pages 723-740, December.
    4. Abeler, Johannes & Becker, Anke & Falk, Armin, 2012. "Truth-Telling: A Representative Assessment," IZA Discussion Papers 6919, Institute of Labor Economics (IZA).
    5. Dickens, William T & Katz, Lawrence F & Lang, Kevin & Summers, Lawrence H, 1989. "Employee Crime and the Monitoring Puzzle," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 331-347, July.
    6. Core, John E. & Guay, Wayne R., 2001. "Stock option plans for non-executive employees," Journal of Financial Economics, Elsevier, vol. 61(2), pages 253-287, August.
    7. David Gill & Victoria Prowse, 2014. "Gender differences and dynamics in competition: The role of luck," Quantitative Economics, Econometric Society, vol. 5, pages 351-376, July.
    8. Houser, Daniel & Vetter, Stefan & Winter, Joachim, 2012. "Fairness and cheating," European Economic Review, Elsevier, vol. 56(8), pages 1645-1655.
    9. Victoria Prowse & David Gill, 2009. "A Novel Computerized Real Effort Task Based on Sliders," Economics Series Working Papers 435, University of Oxford, Department of Economics.
    10. Brian J. Hall & Jeffrey B. Liebman, 1998. "Are CEOs Really Paid Like Bureaucrats?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 653-691.
    11. Gerhard Riener & Simon Wiederhold, 2011. "On Social Identity, Subjective Expectations, and the Costs of Control," Jena Economics Research Papers 2011-035, Friedrich-Schiller-University Jena.
    12. Cadsby C. Bram & Song Fei & Tapon Francis, 2010. "Are You Paying Your Employees to Cheat? An Experimental Investigation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-32, April.
    13. David Gill & Victoria Prowse, 2012. "A Structural Analysis of Disappointment Aversion in a Real Effort Competition," American Economic Review, American Economic Association, vol. 102(1), pages 469-503, February.
    14. Gary Charness & David I. Levine, 2007. "Intention and Stochastic Outcomes: An Experimental study," Economic Journal, Royal Economic Society, vol. 117(522), pages 1051-1072, July.
    15. Marianne Bertrand & Sendhil Mullainathan, 2001. "Are CEOs Rewarded for Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 901-932.
    16. Joseph Tao-yi Wang & Michael Spezio & Colin F. Camerer, 2010. "Pinocchio's Pupil: Using Eyetracking and Pupil Dilation to Understand Truth Telling and Deception in Sender-Receiver Games," American Economic Review, American Economic Association, vol. 100(3), pages 984-1007, June.
    17. Hammermann, Andrea & Mohnen, Alwine & Nieken, Petra, 2012. "Whom to Choose as a Team Mate? A Lab Experiment about In-Group Favouritism," IZA Discussion Papers 6286, Institute of Labor Economics (IZA).
    18. Urs Fischbacher & Franziska Föllmi-Heusi, 2013. "Lies In Disguise—An Experimental Study On Cheating," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 525-547, June.
    19. Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 843-877.
    20. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    21. Victoria Prowse & David Gill, 2009. "A Novel Computerized Real Effort Task Based on Sliders," Economics Series Working Papers 435, University of Oxford, Department of Economics.
    22. Moers, Frank, 2005. "Discretion and bias in performance evaluation: the impact of diversity and subjectivity," Accounting, Organizations and Society, Elsevier, vol. 30(1), pages 67-80, January.
    23. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
    24. Conrads, Julian & Irlenbusch, Bernd & Rilke, Rainer Michael & Walkowitz, Gari, 2013. "Lying and team incentives," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 1-7.
    25. repec:bla:jfinan:v:59:y:2004:i:4:p:1619-1650 is not listed on IDEAS
    26. Oyer, Paul & Schaefer, Scott, 2005. "Why do some firms give stock options to all employees?: An empirical examination of alternative theories," Journal of Financial Economics, Elsevier, vol. 76(1), pages 99-133, April.
    27. Gino, Francesca & Schweitzer, Maurice E. & Mead, Nicole L. & Ariely, Dan, 2011. "Unable to resist temptation: How self-control depletion promotes unethical behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 115(2), pages 191-203, July.
    28. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
    29. Debashish Bhattacherjee, 2005. "The Effects of Group Incentives in an Indian Firm: Evidence from Payroll Data," LABOUR, CEIS, vol. 19(1), pages 147-173, March.
    30. Lundquist, Tobias & Ellingsen, Tore & Gribbe, Erik & Johannesson, Magnus, 2009. "The aversion to lying," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 81-92, May.
    31. Utikal, Verena & Fischbacher, Urs, 2013. "Disadvantageous lies in individual decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 108-111.
    32. Daniel S. Nagin & James B. Rebitzer & Seth Sanders & Lowell J. Taylor, 2002. "Monitoring, Motivation, and Management: The Determinants of Opportunistic Behavior in a Field Experiment," American Economic Review, American Economic Association, vol. 92(4), pages 850-873, September.
    33. Chee W. Chow & Mark K. Hirst & Michael D. Shields, 1994. "Motivating Truthful Subordinate Reporting: An Experimental Investigation in a Two†Subordinate Context," Contemporary Accounting Research, John Wiley & Sons, vol. 10(2), pages 699-720, March.
    34. Lewis, Alan & Bardis, Alexander & Flint, Chloe & Mason, Claire & Smith, Natalya & Tickle, Charlotte & Zinser, Jennifer, 2012. "Drawing the line somewhere: An experimental study of moral compromise," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 718-725.
    35. Scott M. Gilpatric, 2011. "Cheating In Contests," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 1042-1053, October.
    36. Schwieren, Christiane & Weichselbaumer, Doris, 2010. "Does competition enhance performance or cheating? A laboratory experiment," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 241-253, June.
    37. Li Hao & Daniel Houser, 2011. "Honest Lies," Working Papers 1021, George Mason University, Interdisciplinary Center for Economic Science.
    38. Bucciol, Alessandro & Piovesan, Marco, 2011. "Luck or cheating? A field experiment on honesty with children," Journal of Economic Psychology, Elsevier, vol. 32(1), pages 73-78, February.
    39. Croson, Rachel & Boles, Terry & Murnighan, J. Keith, 2003. "Cheap talk in bargaining experiments: lying and threats in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 143-159, June.
    40. Aurélie Bonein, 2011. "Temptation, commitment and peer pressure: a laboratory experiment," Post-Print halshs-00632089, HAL.
    41. Michael C. Jensen, 2003. "Paying People to Lie: the Truth about the Budgeting Process," European Financial Management, European Financial Management Association, vol. 9(3), pages 379-406, September.
    42. Trautmann, Stefan T., 2009. "A tractable model of process fairness under risk," Journal of Economic Psychology, Elsevier, vol. 30(5), pages 803-813, October.
    43. Shalvi, Shaul & Dana, Jason & Handgraaf, Michel J.J. & De Dreu, Carsten K.W., 2011. "Justified ethicality: Observing desired counterfactuals modifies ethical perceptions and behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 115(2), pages 181-190, July.
    44. Steven L. Grover, 1993. "Lying, Deceit, and Subterfuge: A Model of Dishonesty in the Workplace," Organization Science, INFORMS, vol. 4(3), pages 478-495, August.
    45. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
    46. Burns, Natasha & Kedia, Simi, 2006. "The impact of performance-based compensation on misreporting," Journal of Financial Economics, Elsevier, vol. 79(1), pages 35-67, January.
    47. Sanjiv Erat & Uri Gneezy, 2012. "White Lies," Management Science, INFORMS, vol. 58(4), pages 723-733, April.
    48. Giorgio Coricelli & Mateus Joffily & Claude Montmarquette & Marie Villeval, 2010. "Cheating, emotions, and rationality: an experiment on tax evasion," Experimental Economics, Springer;Economic Science Association, vol. 13(2), pages 226-247, June.
    49. Efendi, Jap & Srivastava, Anup & Swanson, Edward P., 2007. "Why do corporate managers misstate financial statements? The role of option compensation and other factors," Journal of Financial Economics, Elsevier, vol. 85(3), pages 667-708, September.
    50. Dreber, Anna & Johannesson, Magnus, 2008. "Gender differences in deception," Economics Letters, Elsevier, vol. 99(1), pages 197-199, April.
    51. Mead, N.L. & Baumeister, R.F. & Gino, F. & Schweitzer, M.E. & Ariely, D., 2009. "Too tired to tell the truth : Self-control resource depletion and dishonesty," Other publications TiSEM c60167a3-c3aa-4b83-9192-1, Tilburg University, School of Economics and Management.
    52. Gary Charness & Nuno Garoupa, 2000. "Reputation, Honesty, and Efficiency with Insider Information: an Experiment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(3), pages 425-451, June.
    53. Knez, Marc & Simester, Duncan, 2001. "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 743-772, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marie Claire Villeval, 2019. "Comportements (non) éthiques et stratégies morales," Revue économique, Presses de Sciences-Po, vol. 70(6), pages 1021-1046.
    2. Catrine Jacobsen & Toke Reinholt Fosgaard & David Pascual†Ezama, 2018. "Why Do We Lie? A Practical Guide To The Dishonesty Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 357-387, April.
    3. Bernd Irlenbusch & Marie Claire Villeval, 2015. "Behavioral ethics: how psychology influenced economics and how economics might inform psychology?," Post-Print halshs-01159696, HAL.
    4. Agnes Bäker & Mario Mechtel, 2019. "The Impact Of Peer Presence On Cheating," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 792-812, April.
    5. Gary Charness & Celia Blanco-Jimenez & Lara Ezquerra & Ismael Rodriguez-Lara, 2019. "Cheating, incentives, and money manipulation," Experimental Economics, Springer;Economic Science Association, vol. 22(1), pages 155-177, March.
    6. Rosenbaum, Stephen Mark & Billinger, Stephan & Stieglitz, Nils, 2014. "Let’s be honest: A review of experimental evidence of honesty and truth-telling," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 181-196.
    7. Zhixin Dai & Fabio Galeotti & Marie Claire Villeval, 2018. "Cheating in the Lab Predicts Fraud in the Field: An Experiment in Public Transportation," Management Science, INFORMS, vol. 64(3), pages 1081-1100, March.
    8. Agnes Baeker & Mario Mechtel, 2015. "Peer Settings Induce Cheating on Task Performance," IAAEU Discussion Papers 201506, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    9. Cadsby, C. Bram & Du, Ninghua & Song, Fei, 2016. "In-group favoritism and moral decision-making," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 59-71.
    10. Valeria Maggian & Marie Claire Villeval, 2016. "Social preferences and lying aversion in children," Experimental Economics, Springer;Economic Science Association, vol. 19(3), pages 663-685, September.
    11. Rosaz, Julie & Villeval, Marie Claire, 2012. "Lies and biased evaluation: A real-effort experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 537-549.
    12. Utikal, Verena & Fischbacher, Urs, 2013. "Disadvantageous lies in individual decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 108-111.
    13. Mechtel, Mario & Bäker, Agnes, 2015. "Peer Effects in Cheating on Task Performance," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113093, Verein für Socialpolitik / German Economic Association.
    14. Garbarino, Ellen & Slonim, Robert & Villeval, Marie Claire, 2019. "Loss aversion and lying behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 379-393.
    15. Aksoy, Billur & Palma, Marco A., 2019. "The effects of scarcity on cheating and in-group favoritism," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 100-117.
    16. Muñoz-Izquierdo, Nora & Gil-Gómez de Liaño, Beatriz & Rin-Sánchez, Francisco Daniel & Pascual-Ezama, David, 2014. "Economists: cheaters with altruistic instincts," MPRA Paper 60678, University Library of Munich, Germany.
    17. Moreno, Ignacio & Vázquez, Francisco J. & Watt, Richard, 2017. "Rationality and honesty of consumers in insurance decisions," Journal of Economics and Business, Elsevier, vol. 89(C), pages 36-46.
    18. Nives Della Valle & Matteo Ploner, 2017. "Reacting to Unfairness: Group Identity and Dishonest Behavior," Games, MDPI, vol. 8(3), pages 1-19, July.
    19. Grolleau, Gilles & Kocher, Martin G. & Sutan, Angela, 2014. "Cheating and loss aversion: do people lie more to avoid a loss?," Discussion Papers in Economics 21387, University of Munich, Department of Economics.
    20. Arbel, Yuval & Bar-El, Ronen & Siniver, Erez & Tobol, Yossef, 2014. "Roll a die and tell a lie – What affects honesty?," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 153-172.

    More about this item

    Keywords

    Bonus; compensation; cheating; dishonesty; lying; employee crime; productivity; slider task; real effort; experiment.;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:50166. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.