The Power of Example: Corruption Spurs Corruption

Nicolas Ajzenman (FGV - Sao Paulo School of Economics)

Abstract : Does political corruption erode civic values and foster dishonest behaviour? I test this hypothesis in the context of Mexico, by combining data on local government corruption and cheating in school tests. I find that, following revelations of corruption by local officials, cheating in cognitive tests by secondary school students increases significantly. The effect is large and robust, it persists for over one year after malfeasance is revealed, and is more pronounced for older students, arguably more exposed to information and to political discussions within and outside the family. The effect is also stronger in areas with higher exposure to local media and in places where the incumbent party was thought to be honest, and therefore corruption revelations have come as a surprise. These findings are validated by evidence from individual survey data which documents that individuals interviewed right after corruption is revealed report to be less honest, less trustworthy and more prone to think that cheating is necessary to succeed, than similar individuals interviewed just before.


Tore Ellingsen (Stockholm School of Economics)
Erik Mohlin (Lunds universitet)

Abstract : We develop a formal theory of decency. Shared values and understandings give rise to social norms. Norms may mandate collectively optimal behavior, but they need not do so. Furthermore, behavior can be affected by social values even if it stops short of norm compliance. Seeking stronger predictions, we propose a structural model of social values; society endorses efficiency and equality, but condemns ill-gotten gains. The model implies that decent people will tend to avoid situations that encourage prosocial behavior. It also rationalizes the existence of willful ignorance, intention-based negative reciprocity, and betrayal aversion.

Is a Fine Still a Price? Replication As Robustness

Cherie Metcalf (Queen's University, Faculty of Law)
Emily Satterthwaite (University of Toronto, Faculty of Law)
Shahar Dillbary (Alabama Law)
Brock Stoddard (Appalachian State University, Department of Econ)

Abstract : Gneezy & Rustichini's (2000) study, "A Fine is a Price", tested the basic assumption in psychology and economics that “when negative consequences are imposed on a behaviour", they will reduce it. In their randomized field study of late arrival at Israeli daycares, the authors instead found that late behaviour increased in response to introducing a fine. Gneezy & Rustichini provided an intuitively powerful explanation: the fine operated like a "price" to transform the extra care into a commodity. It crowded out parents' prior internal social motivations and had a counterproductive effect on the target behaviour. The explanation was intuitively powerful; the paper has been cited more than 2000 times. Given the importance of the paper and its behavioural insight, we seek to both replicate the result and explore how robust it is to different methodological approaches. We translate the structure of the original field study to vignette-based experimental surveys with subjects recruited through Amazon's MTurk. The use of experimental surveys and MTurk is increasingly common in empirical legal studies, psychology and economics. Our approach allows us to directly reproduce key conditions from Gneezy and Rustichini's original field study. Experimental conditions and post-experiment questions help untangle the influence of alternative explanations for the original result, distinguishing contractual concerns from social influences. Our initial results do not replicate the original results in our survey setting. The introduction of fines causes a reduction in anticipated late behaviour. We do not see the shifts in concerns about the social / moral evaluations of the behaviour that Gneezy and Rustichini suggested. Our basic results are consistent with the standard narrative that fines tend to deter behaviour – as Gneezy and Rustichini anticipated in their original study.

Bureaucratic Reasoning

Jed Stiglitz (Cornell Law School)

Abstract : A requirement for public reasoning pervades the modern state. Much of the story of administrative law, indeed, might be understood as an effort to calibrate the requirement of bureaucrats to provide reasons for their actions. The dominant view among scholars and policymakers elevates the value of reason-giving, illustrated for example by a requirement for reason-giving in proposed bipartisan legislation to protect Special Counsel Mueller from politically-based removal. Yet legal and administrative “realists” have long doubted the efficacy of public reasons, and some argue we ought to be more tolerant of laxity in reasoning. Both central and contested, official reason-giving remains surprisingly unexamined empirically. Neither the boosters nor the skeptics have responsive evidence to support their positions that official reason-giving matters, or not. Drawing from the traditions of experimental economics, this article presents responsive evidence on this issue, reporting results from novel experiments that examine whether reason-giving reduces abuses of fiduciary responsibilities. The results from these exercises suggest that a requirement for reason-giving powerfully deters abusive behavior, notably increasing fidelity to fiduciary standards, but principally if reason-giving is subjected to reasonableness review, as through judicial review. The study informs on-going debates over the proper role of reason-giving and judicial review in the modern state.