Negative externalities of cheating: An experiment with charities

An extensive body of research investigates the emergence and characterization of dishonesty by means of the die-under-cup paradigm. However, most of the previous studies do not take into account the negative externalities of unethical behavior, since lying to increase the liar’s payoff only decreases the experimental budget. In this chapter, we experimentally investigate the effect of imposing negative externalities on a charity organization when cheating. In a sample composed by 192 students, comparison between our Baseline treatment and our Charity treatment reveals no significant difference on subjects’ reporting decision. Our analysis does not provide any statistical support to the hypothesis that dishonest behavior may be lower when negative externalities associated with unethical behavior are affecting a charity organization rather than the experimental budget.