Reporting Peers’ Wrongdoing: Experimental Evidence on the Effect of Financial Incentives on Morally Controversial Behavior

• Development Workshop

Date and Location

Tuesday, November 5, 2019, 4:10 PM - 5:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

Reporting a peer’s wrongdoing to an authority is a morally controversial decision: reporting will likely result in a punishment for the peer (and harming others is unethical), but the punitive action might prevent further harm to the victims of the misconduct (which justifies reporting on a moral ground). A policymaker might want to encourage the solution of this moral dilemma in the direction of reporting, through financial incentives. Yet, material incentives sometimes backfire, especially in domains involving moral concerns. Using a field experiment with employees of the Ministry of Education in Afghanistan who are asked to confidentially report their colleagues’ absence, I show that reporting is lower among participants who are offered a monetary reward for their reports. This is the case, however, only for participants who expect their reports to be consequential (making their choice morally-charged). Among employees who are told instead that their reports are inconsequential and wont result in any penalty for their peer (making the choice more morally-neutral), incentives do not backfire.