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Laboratory experiments provide insights into the drivers of cheating behaviour, but it is unclear to what extent cheating in the laboratory generalises to the field. We conducted an experiment with middle and high school students to test whether a common laboratory measure of cheating predicts three types of school misconduct: (i) disruptiveness in class; (ii) homework non-completion; and (iii) absenteeism. We find that students who cheat in the experimental task are more likely to misbehave at school, suggesting that experimental measures of cheating generalise to rule violating behaviour in naturally occurring environments.

Civic honesty is essential to social capital and economic development but is often in conflict with material self-interest. We examine the trade-off between honesty and self-interest using field experiments in 355 cities spanning 40 countries around the globe. In these experiments, we turned in more than 17,000 lost wallets containing varying amounts of money at public and private institutions and measured whether recipients contacted the owners to return the wallets. In virtually all countries, citizens were more likely to return wallets that contained more money. Neither nonexperts nor professional economists were able to predict this result. Additional data suggest that our main findings can be explained by a combination of altruistic concerns and an aversion to viewing oneself as a thief, both of which increase with the material benefits of dishonesty.

The presence of workers who reciprocate higher wages with greater effort can have important consequences for firms and labor markets. Knowledge about the extent and determinants of reciprocal effort choices is, however, incomplete. We investigate the role of fairness perceptions and social preferences in a field experiment in which workers were hired for a one-time job. We show that workers who perceive being underpaid at the base wage increase their performance if the hourly wage increases, whereas those who feel adequately paid or overpaid at the base wage do not change their performance. Moreover, we find that only the workers who display reciprocity in a choice experiment show reciprocal effort responses in the field. The workers who lack reciprocity in the choice experiment do not respond to the wage increase, even if they feel underpaid at the base wage. Our findings suggest that fairness perceptions and social preferences are key in workers' performance response to wage increases. In our study, the wage increase affects effort mainly through the removal of perceived unfairness, i.e., the elimination of negative reciprocity toward the firm, rather than positive reciprocity. These results are the first direct evidence of the fair-wage effort hypothesis in the field and also help interpret previous contradictory findings in the literature. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.1970 . This paper was accepted by Uri Gneezy, behavioral economics.

Social comparison has potentially far reaching consequences in many economic domains. We conducted a field experiment to examine how social comparison affects workers’ effort provision if their own wage or that of a co-worker is cut. Workers were assigned to groups of two, performed identical individual tasks, and received the same performance-independent hourly wage. Cutting both group members’ wages caused a decrease in performance. But when only one group member’s wage was cut, the affected workers decreased their performance more than twice as much as when both workers’ wages were cut. This finding indicates that social comparison among workers affects effort provision because the only difference between the two wage-cut treatments is the other group member’s wage level. In contrast, workers whose wage was not cut but who witnessed their group member’s pay being cut displayed no change in performance relative to the baseline treatment in which both workers’ wages remained unchanged. This indicates that social comparison exerts asymmetric effects on effort.

According to popular opinion, unethical business practices are common in the financial industry; here, the employees of a large, international bank are shown to behave, on average, honestly in a laboratory game to reveal dishonest behaviour, but when their professional identity as bank employees was rendered salient, the prevalence of dishonest behaviour increased. When to trust a banker Popular opinion has it that unethical business practices are prevalent in the culture of the financial sector. Ernst Fehr and colleagues sought scientific evidence to support this claim. They find that in a laboratory game designed to reveal dishonest behaviour, employees of a large international bank behaved by-and-large as honestly as the rest of us. But in tests designed to mimic the competitive nature of their profession, many of the bankers began to act dishonestly. Those from other industries and student volunteers did not show this effect. The authors conclude that if financial institutions are to regain our trust, they need to encourage honest behaviour by changing the norms associated with their workers' professional identity. Trust in others’ honesty is a key component of the long-term performance of firms, industries, and even whole countries 1 , 2 , 3 , 4 . However, in recent years, numerous scandals involving fraud have undermined confidence in the financial industry 5 , 6 , 7 . Contemporary commentators have attributed these scandals to the financial sector’s business culture 8 , 9 , 10 , but no scientific evidence supports this claim. Here we show that employees of a large, international bank behave, on average, honestly in a control condition. However, when their professional identity as bank employees is rendered salient, a significant proportion of them become dishonest. This effect is specific to bank employees because control experiments with employees from other industries and with students show that they do not become more dishonest when their professional identity or bank-related items are rendered salient. Our results thus suggest that the prevailing business culture in the banking industry weakens and undermines the honesty norm, implying that measures to re-establish an honest culture are very important.

Countercyclical Risk Aversion Can Explain Major Puzzles Such as the High Volatility of Asset Prices. Evidence for its Existence is However, Scarce Because of the Host of Factors that Simultaneously Change During Financial Cycles. We Circumvent these Problems by Priming Financial Professionals with Either a Boom or a Bust Scenario. Subjects Primed with a Financial Bust were Substantially More Fearful and Risk Averse than those Primed with a Boom, Suggesting that fear may play an Important Role in Countercyclical Risk Aversion. The Mechanism Described here is Relevant for Theory and may Explain Self-reinforcing Processes That Amplify Market Dynamics.

We conducted an experiment with 182 inmates from a maximum security prison to analyze the impact of criminal identity salience on cheating. The results show that inmates cheat more when we exogenously render their criminal identity more salient. This effect is specific to individuals who have a criminal identity, because an additional placebo experiment shows that regular citizens do not become more dishonest in response to crime-related reminders. Moreover, our experimental measure of cheating correlates with inmates' offences against in-prison regulation. Together, these findings suggest that criminal identity salience plays a crucial role in rule violating behaviour.

Honesty plays a key role in social and economic interactions and is crucial for societal functioning. However, breaches of honesty are pervasive and cause significant societal and economic problems that can affect entire nations. Despite its importance, remarkably little is known about the neurobiological mechanisms supporting honest behavior. We demonstrate that honesty can be increased in humans with transcranial direct current stimulation (tDCS) over the right dorsolateral prefrontal cortex. Participants (n = 145) completed a die-rolling task where they could misreport their outcomes to increase their earnings, thereby pitting honest behavior against personal financial gain. Cheating was substantial in a control condition but decreased dramatically when neural excitability was enhanced with tDCS. This increase in honesty could not be explained by changes in material self-interest or moral beliefs and was dissociated from participants’ impulsivity, willingness to take risks, and mood. A follow-up experiment (n = 156) showed that tDCS only reduced cheating when dishonest behavior benefited the participants themselves rather than another person, suggesting that the stimulated neural process specifically resolves conflicts between honesty and material self-interest. Our results demonstrate that honesty can be strengthened by noninvasive interventions and concur with theories proposing that the human brain has evolved mechanisms dedicated to control complex social behaviors.

In recent years, the banking industry has witnessed several cases of excessive risk-taking that frequently have been attributed to problematic professional norms. We conduct experiments with employees from several banks in which we manipulate the saliency of their professional identity and subsequently measure their risk aversion in a real stakes investment task. If bank employees are exposed to professional norms that favor risk-taking, they should become more willing to take risks when their professional identity is salient. We find, however, that subjects take significantly less risk, challenging the view that the professional norms generally increase bank employees’willingness to take risks.