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  • October 2013
  • Article
  • Management Science

License to Cheat: Voluntary Regulation and Ethical Behavior

By: F. Gino, E. Krupka and R. Weber
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Abstract

While monitoring and regulation can be used to combat socially costly unethical conduct, their intended targets are often able to avoid regulation or hide their behavior. This surrenders at least part of the effectiveness of regulatory policies to firms' and individuals' decisions to voluntarily submit to regulation. We study individuals' decisions to avoid monitoring or regulation and thus enhance their ability to engage in unethical conduct. We conduct a laboratory experiment in which participants engage in a competitive task and can decide between having the opportunity to misreport their performance or having their performance verified by an external monitor. To study the effect of social factors on the willingness to be subject to monitoring, we vary whether participants make this decision simultaneously with others or sequentially as well as whether the decision is private or public. Our results show that the opportunity to avoid being submitted to regulation produces more unethical conduct than situations in which regulation is either exogenously imposed or entirely absent.

Keywords

Ethical Behavior; Dishonesty; Regulation; Selection; Social Norms; Behavior; Ethics; Societal Protocols

Citation

Gino, F., E. Krupka, and R. Weber. "License to Cheat: Voluntary Regulation and Ethical Behavior." Management Science 59, no. 10 (October 2013): 2187–2203.
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About The Author

Francesca Gino

Negotiation, Organizations & Markets
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More from the Authors
  • Mary Caroline Tillman at Egon Zehnder: Spotting Talent in the 21st Century By: Francesca Gino, Bradely R. Staats and Anne Marie Green
  • You Need Two Leadership Gears: Know When to Take Charge and When to Get Out of the Way By: Lindy Greer, Francesca Gino and Robert Sutton
  • Authentic First Impressions Relate to Interpersonal, Social, and Entrepreneurial Success By: David M. Markowitz, Maryam Kouchaki, Francesca Gino, Jeffrey T. Hancock and Ryan L. Boyd
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