Context-dependent cheating: Experimental evidence from 16 countries

1 This is a preprint of the following paper: Context-dependent cheating: Experimental evidence from 16 countries Forthcoming in: Journal of Economics Behavior and Organization David Pascual‐Ezama Universidad Complutense de Madrid (UCM) Toke R. Fosgaard University of Copenhagen - Department of Food and Resource Economics Juan-Camilo Cárdenas Universidad de Los Andes Praveen Kujal Middlesex University Robert Ferec Veszteg Universidad del País Vasco Beatriz Gil-Gómez de Liaño Department of Social Psychology and Methodology, Universidad Autónoma de Madrid Brian Gunia Johns Hopkins University - Carey Business School Doris Weichselbaumer Johannes Kepler University Linz - Department of Economics; Institute for the Study of Labor (IZA) Katharina Hilken Department of Applied Economics, Free University of Brussels (VUB) Armenak Antinyan University of Erlangen-Nuremberg, Department of Economics Joyce Delnoij Utrecht University - Utrecht University School of Economics Antonios Proestakis Joint Research Center of the European Commission Michael D. Tira University of Padua - Dipartimento di Psicologia Generale 2 Yulius Pratomo Satya Wacana Christian University Tarek Jaber-López Jaume I University Pablo Branas-Garza Middlesex University 3 Context-dependent cheating: Experimental evidence from 16 countries Abstract: Policy makers use several international indices that characterize countries according to the quality of their institutions. However, no effort has been made to study how the honesty of citizens varies across countries. This paper explores the honesty among citizens across sixteen countries with 1440 participants. We employ a very simple task where participants face a trade-off between the joy of eating a fine chocolate and the disutility of having a threatened self-concept because of lying. Despite the incentives to cheat, we find that individuals are mostly honest. Further, international indices that are indicative of institutional honesty are completely uncorrelated with citizens' honesty for our sample countries. Keywords: Honesty, corruption, cultural differences 1. Introduction Imagine yourself on a university campus. You see the following announcement: “Is this your lucky day? Flip a coin and win a Chocolate”. You approach the desk and receive the opportunity to win a delicious and beautifully wrapped Lindt Lindor chocolate truffle by flipping a coin with a black and a white side. You flip the coin in a box at a nearby table; the box protects your anonymity. You win a chocolate if you report that the white side came up and nothing if you report black. If you actually rolled black, the only thing keeping you from enjoying the truffle is your moral compass. You face a tradeoff between the joy of eating a fine chocolate and the individual disutility of having a threatened self-concept because of lying. There is no social shaming or ostracism. We ran this experiment (three treatments) in sixteen countries to test how some regular citizens around the world behave in such a situation. Interestingly, we did not find any significant differences across an otherwise very heterogeneous set of countries. Most studies about cultural differences regarding dishonest behavior have used the survey methodology. Transparency International reports large differences in corruption around the world and the World Value Survey documents cross-cultural differences in opinions regarding how “justifiable” it is to cheat on taxes or public transportation fares. However, corruption indices measure perceptions and not actual behaviors. Further, variations across countries in academic dishonesty (Rawwas, Al-Kahtib and 4 Vitell, 2004) and tax evasion (Alm, Sanchez and de Juan, 1995; Cumming, Martinez, McKee and Torgler, 2009) reinforce the impression that cheating is both abundant and diverse around the world. In the same line, recent research in behavioral and experimental economics has shown that a large fraction of individuals are prone to cheating (Ariely, 2012; Gneezy, 2005). An exception to this trend is Abeler et al. (2014) who report a phone-based incentivized experiment with a representative sample in Germany. They find that most people report honestly after flipping a coin in absolute privacy with a 50% chance of getting a payoff of 15 euros in cash or through an Amazon gift certificate. Abeler and colleagues also complemented their study with a laboratory experiment and find that there is a slightly higher level of dishonest reporting in this setting. The dominant view in the literature is that individuals engage in dishonest behavior as long as they can maintain a positive self-image while obtaining the maximum payoffs from their dishonesty (Mazar, Amir and Ariely, 2008). Further, research has shown that creating a justification of a positive self-image while behaving dishonestly is context specific (Fosgaard, Hansen and Piovesan, 2013; Gino and Galinsky, 2012; Pascual-Ezama, Prelec and Dunfield, 2013). In this paper, we examine precisely this. That is, whether cheating per se differs across different countries and whether the context1 influences this behavior. We conducted an experiment in which participants reported the outcome of a coin toss to win a prize. We replicated the experiment in a diverse set of 16 countries around the world with 1440 subjects, 90 in each country (30 per treatment). We used a simple cheating task based on Bucciol and Piovesan (2011). We took great care to run each session under similar conditions. The location of the experiment was always a busy common areas on university campuses (See Table 1 for an overview). Participants had to flip a black/white coin; if the outcome was reported white, they obtained a red Lindt Lindor Truffle; if reported black, they obtained nothing. As our sample includes substantial cultural variation—including participants from Anglo-Saxon, Latin, Germanic, Nordic and Asiatic countries—one would expect substantial heterogeneity in cheating. In addition, and consistent with a social constructionist view, the effects of culture depend on the specifics of the choice context (Gelfand, 2013; Kramer and Messick, 1995). In the first treatment (the Self-Reported Treatment, SRT) each participant flipped a coin in a private area without the presence of the researchers or other participants. Afterwards the subject filled a report sheet – indicating sex and the white/black coin-toss result. It was clearly indicated that the filled form should be left in the box nearby. No interaction with the experimenters occurred in this task. Taking into account that there are heterogenous types of dishonest people (Gneezy, Rockenbach and Serra-García, 2013), this task is a good measure of dishonesty for several reasons. Firstly, as a growing body of research suggests that in completely anonymous settings, where the risk of being caught 1 The context defines the strength of the moral compass in our experiment. 5 is inexistent, finding 100% cheating is not unusual (Pascual-Ezama, Prelec and Dunfield, 2013; Shu, Mazar, Gino, Ariely and Bazerman, 2012), however, people may also restrict the amount of cheating (Ayal and Gino, 2011; Gneezy, 2005). In our task there is no possibility to restrict the amount of cheating, the decision is simply to be honest or not (report black or white). Further, decision making is immediate and intuitive, instead of deliberative and meditative in a cognitive dual system (Bazerman and Tenbrunsel, 2011; Kahneman, 2011). In our experiment, cheating is an automatic response and the need for justification matters only when people have enough time to deliberate (Shalvi, Eldar and Bereby-Meyer, 2012). Finally, the reward is a simple chocolate that gives instant gratification. The two other treatments were the Written and the Verbal Reported Treatments (WRT and VRT, respectively). In WRT, participants completed a report sheet in private and submitted it to the experimenter. The experimenter made a note of the reported outcome, and, if due, handed the chocolate to the participant. In VRT, participants were not asked to fill any form. They verbally reported the outcome of the coin flip to the experimenter. If reported white, the experimentalist handed a chocolate to them. Our different treatments allow us to understand how the level of cheating is shaped by context, i.e. the differences in reporting across treatments. Building on the theory of self-image maintenance (Mazar, Amir and Ariely, 2008), we predict that our three treatments will have different implications with regard to the moral processes of reporting incorrect outcomes. We conjecture that misreporting in the SRT is the least morally difficult decision since reporting does not involve any kind of social interaction and, subsequently, no social pressure from the experimenter. Consequently, the decision to be dishonest is only a tradeoff between the internal moral pressure (and the consequent guilt experienced) against the pleasure of enjoying a Lindt chocolate. In WRT, an additional moral pressure originates from the fact that the decision is documented on paper and handed to another person. This additional social process is likely to involve shame (on top of guilt) in case of dishonesty, and hence we expect less dishonesty occurring in this treatment. Relative to verbal reports, we conjecture that written reports are more distant and make it easier to take away internal moral control (Shu et al. 2012). Therefore, we expect the VRT to bring even stronger self-image erosion in case of cheating, since the untruthful decision now must be stated face-to-face. In this situation we expect the most moral pressure to be present and hence the least dishonest behavior. This is consistent with Bandura, Barbaranelli, Caprara and Pastorelli (1996) who find that verbal reports are likely to be less prone to dishonest behavior than written reports. Given this we hypothesize that self-reporting with no interaction (with the experimenter) increase the temptation to be dishonest. 6 Table 1. Summary of countries studied. Country City University Austria Linz Johannes Kepler University Linz Belgium Brussels Vrije Universiteit Brussel (VUB) Colombia Bogotá Universidad de los Andes Denmark Copenhagen Copenhagen University Finland Oulu University of Oulu Germany Nuremberg University of Erlangen-Nuremberg Greece Rethymno University of Crete India Delhi Hansraj College, University of Delhi Indonesia Salatiga Universitas Kristen Satya Wacana Italy Padova Università di Padova Japan Tokyo Waseda University Netherlands Utrecht Utrecht University Spain Madrid Universidad Autónoma Madrid Turkey Istanbul Bahçeşehir Üniversitesi USA Baltimore Johns Hopkins University UK London Middlesex University 2. Experimental design We replicate a simple coin task by Bucciol and Piovesan (2011). As noted before, participants had to flip a black/white coin. If the reported toss was white they obtained a red Lindt Lindor chocolate and nothing otherwise. At first glance, the choice of chocolate as an incentive might seem as unusual compared to the conventional choice of money. We believe that chocolates are a good solution for studying decisionmaking across countries, given that our study is in a field setting and not in the laboratory. In fact, we believe that it is advantageous to tell students you have a chance of winning a chocolate, rather than telling them you have a chance to win a dollar (or any corresponding local currency). Consuming a small snack in such a situation is simply much more of an everyday event, and hence feels more natural. And a more natural setting enables greater experimenter control and external validity. Furthermore, a chocolate 7 is a chocolate anywhere, and subjects never have to calculate the monetary value of the good, just receive a small delicious snack. Clearly, there are many other potential incentive approaches one could apply. A monetary prize could be scaled based on Big Mac prizes, GDP, or any purchasing power index. Although there might be country differences in chocolate preference (as indicated by Messerli, 2012), the choice of chocolate as payment constitutes just as many or just as few concerns as any other cross-country payment vehicle, including country-adjusted monetary compensations. Another possible concern is the very small size of the incentive. We acknowledge the small size, yet we want to emphasize that considering the extremely short duration of the experiment (perhaps 1 or 2 minutes), our payment translates into an hourly payment similar to what is used in most laboratory studies. Our participants are university students2. The coin was flipped only once and by one person at a time. The task was performed in a private area at a safe distance from the experimenters or other participants. The location of the experiment was within the college/university campus, for example, in a hallway in the cafeteria area, hence ensuring a steady flow of potential participants. To ensure that we do study country differences, we ensured that only native people participated in the various locations. The importance of ensuring this is supported by evidence of the effect of immigrants’ original country social norms in ethical behavior (Kountoris and Remoundou, 2013). The experiment was carried out in the local working language for both the verbal and the written part.3 The whole study comprises three different treatments according to the level of proximity between the participant and the experimenter: • Self-Reported Treatment (SRT): A student approached the experimenter (at table A, see Figure A1 in the appendix for details), he/she was handed a report sheet, and was guided to table B (far enough away from the researcher area) to flip the black/white coin privately (see B in Figure A1). The coin flip was carried out inside a small cardboard box to make it truly private. The student noted gender and the result of the coin flip on the report sheet at table B. After filling out the report sheet, the student walked over to a third table (table C in another private area at a distance from the experimenter, see C in Figure A1) to deposit the report sheet in a box, and to take the chocolate him/herself in case of a white toss. • Written Reported Treatment (WRT): Exactly the same as SRT, but now with the filled out report sheet in hand, the student went back to table A, gave the report sheet to the 2 Recent papers show that typical experimental subjects are not really different from ordinary people (see for instance Exadaktylos, Espin and Branas-Garza, 2013 for social dilemmas.) 3 A few students asked why the coin-chocolate event was carried out. Our prepared explanation was that the purpose was to understand the students’ interest for chocolates. This statement was intentionally made imprecise, such that students did not think this was a test but rather saw it as a chocolate promotion (we never said it was a Lindt promotion). 8 experimenter and received the chocolate if a white toss was reported. Table C is therefore not used (see figure A1, appendix). • Verbal Reported Treatment (VRT): Exactly the same as WRT, but now the student did not have to fill out the report sheet (only report gender) and had to inform the experimenter verbally about the outcome of the coin toss. We ran the experiment with 90 participants in each country. There were 10 students for each treatment and this was repeated three times: 10 (WRT), 10 (VRT), 10 (SRT), 10 (WRT), 10 (VRT), 10 (SRT), 10 (WRT), 10 (VRT), 10 (SRT). We started each treatment with ten chocolates on a plate on table B (VRT and WRT) or table C (SRT). When we changed the treatment we refilled the chocolates taken by the participants and registered the exact number of chocolates replaced4. At the beginning of each treatment we started with ten chocolates in the plate. At the end of the experiment we compared the numbers in our records with the reports by the participants. In WRT and SRT participants wrote the color on the report sheet. In VRT participants only wrote the gender. In this case, when participants gave us the report sheet and told us the color we tore a little corner of the report sheet when they told us black so at the end we could know how many blacks and whites were declared. Note that, as we kept no names or individual-specific records, we had to be very careful about whether someone returned. Experimenters were instructed to inform anyone who tried to return to flip the coin again that it was only possible to participate once. In case, faculty members showed up for participation, it was emphasized that it was intended to be a student event. Completing the experiment took about a minute or two. 3. Results 3.a. Differences by treatments To our great surprise, overall only 57% of the participants reported white across all three treatments and countries. Since the probability of obtaining white is 50%, this result indicates that 86% resisted the temptation to lie [100% - 2(57%-50%)]. We conclude that little dishonesty is observed across all countries and treatments. Looking at the different treatments, the degree of dishonest behavior, listed as the percentage of white outcomes, confirms our initial conjectures. We observe a greater amount of lying in the SRT, with WRT in the middle, and with VRT having the smallest amount of lying. 62% (SelfRT) > 57% (WrittenRT) >53% (VerbalRT) 4 Note that having more or less chocolates on the plates is not an issue for participants as they never get to know the total. What they see (on the plate) is the only reference they have. 9 The differences between SRT and WRT are not statistically significant (χ2=.316; p-value=.574), although the average across the sixteen societies were 5 percentage points higher for the former. However, using a contingency table (Pearson χ2) the difference between SRT and VRT was larger (9 percentage points) and significant at the 5% level (χ2=4.479; p-value=0.034). Further, we do not find any significant differences between WRT and VRT (χ2=2.422; p-value=0.120). Thus, comparing the different treatments we find that the verbal reports are likely to be less prone to dishonest behavior than written reports in line with previous literature (Bandura, Barbaranelli, Caprara and Pastorelli, 1996; Festinger and Carlsmith, 1959; Mazar, Amir and Ariely, 2008) and we further find that self-reporting the answers (and not having to deliver it to the experimenter) increases this effect. 3.b. Differences by countries A second important result is that we find no statistically significant differences across the 16 countries across any treatment: SRT (χ2 = 16.953; p-value=0.322); VRT (χ2 = 15.691; p-value=0.403) and WRT (χ2 = 22.674; p-value=0.091). This suggests that there is a high level of homogeneity in behavior across our sample countries. Additional interesting results show up from a closer examination of the data. Since tossing a coin follows a binomial distribution, we looked for those countries where there is an anomalous number of white (awarded) coins reported. Table 2 reports detailed information by country and treatments5. At the country level, the share of whites reported in excess of 50% (across all treatments), is significant (at a 5% significance level) in three out of sixteen countries. Yet, the overall country level effects can mask underlying effects at the treatment level. We therefore focus on the treatment effects at the country level. Obviously a sample size of 30 per treatment allows us only to make rough assessment of the degree of cheating, but we still believe this rough measure provides a useful comparison across countries and treatments6. 5 We have also conducted a Logit analysis to explain the outcome of individual coin tosses. In the regression, among other factors, we controlled for different income levels across countries (with the help of per-capita GNI) and for country-level per-capita cocoa consumption. While income does not seem to have a significant impact, per-capita cocoa consumption has a negative effect on cheating, i.e. the higher the per-capita consumption the lower is cheating. 6 We also conduct the analysis by using Inglehart-Welzel cultural categories (based on the World Value Surveys). Again we do not find any robust effect of culture on cheating behavior. 16 Bucciol, A. and M. Piovesan. 2011. Luck or cheating? A field experiment on honesty with children. Journal of Economic Psychology, 32 (1), 73-78. Croson, R. and U. Gneezy. 2009. Gender differences in preferences. Journal of Economic Literature, 47(2), 1-27. Cummings, R.G., J. Martinez-Vazquez, M. McKee and B. Torgler. 2009. Tax Morale Effects Tax Compliance: Evidence From Surveys And An Artefactual Field Experiment. Journal of Economic Behavior and Organization, 70, 447-457. Dreber, A., Johannesson, M., 2008. Gender differences in deception. Economic Letters, 99 (1), 197–199. Exadaktylos, F., A.M. Espín and P. Brañas-Garza. 2013. Experimental subjects are not different. Scientific Reports 3(1231). DOI: 10.1038/srep01213 Falk, A. and J. Heckman. 2009. Lab Experiments Are a Major Source of Knowledge in the Social Sciences. Science, 326 (5952), 535-538. Festinger, L. and J.M. Carlsmith. 1959. Cognitive consequences of forced compliance. Journal of Abnormal and Social Psychology, 58, 203–210. Fosgaard, T., L.G. Hansen and M. Piovesan. 2013. Separating Will from Grace: An Experiment on Conformity and Awareness in Cheating. Journal of Economic Behavior and Organization, 93, 279284. Gelfand, M.J. et al. 2013. Toward a Culture-by-Context Perspective on Negotiation: Negotiation Teams in the United States and Taiwan. Journal of Applied Psychology, 98 (3), 504-513. Gino, F. and A.D. Galinsky. 2012. Vicarious Dishonesty: When Psychological Closeness Creates Distance from One's Moral Compass. Organizational Behavior and Human Decision Processes,119 (1), 15-26. Gneezy, U. 2005. Deception: The role of consequences. American Economic Review, 95 (1), 384-394. Gneezy, U., B. Rockenbach and M. Serra-García. 2013. Measuring lying aversion. Journal of Economic Behavior & Organization, 93, 293-300. Kahneman, D. 2011. Thinking: Fast and Slow. Farrar Straus and Giroux, New York. Kountouris, Y. and K. Remoundou. 2013. Is there a cultural component in tax moral? Evidence from immigrants in Europe. Journal of Economic Behavior and Organization, 96,104-119. Kramer, R.M. and D. Messick. 1995. Negotiation as a social process. Thousand Oaks, CA: Sage. Magnus, J.R., V.M. Polterovich, D.L. Danilov and A.V. Savvateev. 2002. Tolerance to cheating: an analysis across cultures. The Journal of Economic Education, 33, 125-135. Mazar, N., O. Amir and D. Ariely. 2008. The Dishonesty of Honest People: A Theory of Self-Concept Maintenance. Journal of Marketing Research, 45 (6), 633-644. 17 Messerli, F.H. 2012. Chocolate consumption, cognitive function, and nobel laureate. New England Journal of Medicine, 367, 1562–1564Pascual-Ezama, D., D. Prelec and D. Dunfield. Motivation, Money, Prestige and Cheats. Journal of Economic Behavior and Organization, 93, 367-373. Rawwas, M.Y.A., J.A. Al-Khatib and S.J. Vitell. 2004. Academic dishonesty: A cross-cultural comparison of U.S. and Chinese marketing students. Journal of Marketing Education, 26, 89-100. Shalvi, S., O. Eldar and Y. Bereby-Meyer. 2012. Honesty requires time (and lack of justifications). Psychological Science, 23, 1264–1270. doi: 10.1177/0956797612443835 Shu, L., N. Mazar, F. Gino, D. Ariely and M.H. Bazerman. 2012. Signing at the beginning makes ethics salient and decreases dishonest self-reports in comparison to signing at the end. Proceedings of the National Academy of Sciences, 109 (38), 15197-15200. 18 Appendix: Details on experimental design We used a poster with the following text: “Is this your lucky day? Flip a coin and win a Chocolate”. When the participants arrived, the researchers gave a report sheet to them with different text (depending on the treatment). Every participant in the three different treatments marked the gender in the report sheet (that was important because in the SRT treatment researchers cannot recorder the gender). Instructions were the following: • Non Reported Treatment: “If you want to win a chocolate, go to table B and flip a coin inside the box. Then mark on the paper the color you had, black or white, and your gender. Go to the table C, and deposit the paper in the box. If you mark white you can take a chocolate, if you mark black you just leave”. • Written Reported Treatment: “If you want to win a chocolate, go to table B and flip a coin inside the box. Then mark on the paper the color you had, black or white, and your gender. Come back and give us the paper. If you mark white we will give you a chocolate, if you mark black, nothing” • Verbal Reported Treatment: “If you want to win a chocolate, go to table B and flip a coin inside the box. Then mark on the paper your gender, come back, and tell us the color you had. If it was white we will give you a chocolate, if it is black, nothing” 19 Figure A1. Procedure and tables’ distribution. Block A: WRT and VRT tables’ distribution. We used a table (Table A) with a Poster (where the researchers were) in a visible situation for students (for example in hallway in the cafeteria area). With a couple of meters of distance in another table (Table B) there was a box with a black/white coin inside where the participants flipped the coin (inside the box) without nobody could see them. Block B: SRT tables’ distribution. In SRT there was another table (Table C) with was a small box where the participants gave the report sheet and took the chocolates. Block C: Picture example in Spain. Although the experiment rules are written in the reports the researchers provide to the participants at the beginning of the task, all researchers are native in order to avoid misunderstandings in the communication. CHOCOLATES REPORT BOX TABLE C COIN BOX TABLE B PEN RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A CHOCOLATES REPORT BOX TABLE C CHOCOLATES REPORT BOX CHOCOLATES REPORT BOX TABLE C COIN BOX TABLE B PEN COIN BOX TABLE B COIN BOXCOIN BOX TABLE B PENPEN RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate RESULTS BOX RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A COIN BOX TABLE B PEN CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate CHOCOLATES RESULTS BOX CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A COIN BOX TABLE B PEN COIN BOX TABLE B COIN BOXCOIN BOX TABLE B PENPEN A B C CHOCOLATES REPORT BOX TABLE C COIN BOX TABLE B PEN RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A CHOCOLATES REPORT BOX TABLE C CHOCOLATES REPORT BOX CHOCOLATES REPORT BOX TABLE C COIN BOX TABLE B PEN COIN BOX TABLE B COIN BOXCOIN BOX TABLE B PENPEN RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate RESULTS BOX RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A COIN BOX TABLE B PEN CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate CHOCOLATES RESULTS BOX CHOCOLATES RESULTS BOX Is your lucky day? Flip a coin and win a Chocolate TABLE A COIN BOX TABLE B PEN COIN BOX TABLE B COIN BOXCOIN BOX TABLE B PENPEN A B C