Maggian V., Galeotti F., Villevan M. C. (2019).

Fraud Deterrence Institutions Reduce Intrinsic Honesty. SSRN Electronic Journal

Abstract:

Deterrence institutions are widely used in modern societies to discourage rule violations but whether they have an impact beyond their immediate scope of application is usually ignored. Using a natural field experiment, we show that they affect intrinsic honesty across contexts. We identified fraudsters and non-fraudsters in public transport who were or not exposed to ticket inspections by the transport company. We then measured the intrinsic honesty of the same persons in a new unrelated context where they could misappropriate money. Instead of having an educative effect, the exposure to deterrence practices increases unethical behavior of fraudsters but also of non-fraudsters.