• Behave4

Peer Effects in Unethical Behavior: Standing or Reputation?

Could the fact of working in a shared space, in the presence of colleagues, affect in-job cheating? Does the way we manage our team influence the team members’ honest/dishonest behavior?

At least, you will agree that analyzing this important issue in a work environment could offer critical insights for companies’ performance and productivity.

Recently, one of our top behavioral economists and co-founder at Behave4, jointly with researchers from MIT, has investigated this topic. Their work shows that working in an unsupervised, isolated situation under competition, can increase dishonest behavior to achieve prestige.

A worker is concentrated at his workstation with his colleague at the next table. Both must jointly submit a report to the manager. His/her colleague leaves the office again to smoke even though he/she has already left the office as many times as the company has stipulated. The worker is dying to light another cigarette and thinks: “If she/he wastes time, I can do it too”.

As we can see, it is not necessary to think about drastically dishonest behavior. The small day-to-day things add up to a high cost for each company and being able to maintain high supervision is also very expensive. Another worker is on a commercial visit with his manager. In the meeting with the client, the manager offers something that the worker knows is not possible.

When they leave the meeting, he asks why the manager has offered something he/she will not be able to fulfill. Even if the client signs the contract, satisfaction will be low, and the company will eventually lose the client. “I’ve met my sales targets and collected my incentives. When the customer leaves because he is not satisfied, it will be the responsibility of the technology department and not ours”. Months later and in a hurry, because he didn’t reach his objectives, the same worker finds himself in a similar situation when he is the responsible for purchasing. What will he do?

In their research, the authors examine how familiar-peer influence, supervision, and social incentives affect worker performance and (dis)honest behavior. It seems clear that working in the presence of peers is an effective mechanism to constrain honest/dishonest behavior compared to an isolated work situation.

On the other hand, the worker’s self-image acts as an effective social incentive curtailing individual cheating behavior when there is a mere suspicion of dishonesty from another peer. What does it mean? Reputation matters.

But, what happens when the suspicion of dishonesty increases because of multiple peers behaving dishonestly? In this case, the desire to improve standing is sufficient to nudge individuals’ behavior back to cheating at the same levels as isolated situations.

One of the most relevant take-homes is the fact that honest people could decrease their performance as the suspicion of dishonesty increases, and that causes a considerable cost for companies.

For further information about the relationship between peer effects, economic and social incentives, performance, and dishonesty, see:



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