Speaker: Agne Kajackaite (Berlin Social Science Center)

Webpage: www.wzb.eu/de/personen/agne-kajackaite

Abstract:
This paper studies how control institutions of truthful reporting affect cheating behavior. In a large-scale online  experiment, we use a repeated version of the observed game (Gneezy et al., 2018). We find that when uncertainty  exists regarding whether a control institution is in place, participants “break bad” over time and cheat more than participants who know no control institution is in place. That is, the uncertain (malfunctioning) institution leads to  more cheating than no institution at all, because the development of lying behavior is endogenous to the institution.  We also test the effects of a strong institution and a weak institution and find the strong institution reduces cheating on the intensive margin but leads to detrimental effects on the extensive margin; by contrast, the weak institution has  little impact on cheating.