Under what conditions do people act dishonestly to help or hurt others? We addressed this question by examining the influence of a previously overlooked factor-the beneficiary or victim of dishonest acts. In two experiments, we randomly paired participants and manipulated their wealth levels through an initial lottery. We then observed how inequity between partners influenced the likelihood of one dishonestly helping or hurting the other, while varying the financial incentives for dishonest behavior. The results show that financial self-interest cannot fully explain people's tendency to dishonestly help or hurt others. Rather, such dishonesty is influenced by emotional reactions to wealth-based inequity, even when the dishonesty bears a personal financial cost. Envy evoked by negative inequity led to hurting behavior, whereas guilt induced by positive inequity motivated helping behavior. Finally, inequity between the partner and third parties triggered dishonest helping through empathy with the partner.

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Most research linking compensation to strategy relies on agency theory economics and focuses on executive pay. We instead focus on the strategic compensation of nonexecutive employees, arguing that while agency theory provides a useful framework for analyzing compensation, it fails to consider several psychological factors that increase costs from performance‐based pay. We examine how psychological costs from social comparison and overconfidence reduce the efficacy of individual performance‐based compensation, building a theoretical framework predicting more prominent use of team‐based, seniority‐based, and flatter compensation. We argue that compensation is strategic not only in motivating and attracting the worker being compensated but also in its impact on peer workers and the firm's complementary activities. The paper discusses empirical implications and possible theoretical extensions of the proposed integrated theory. Copyright © 2012 John Wiley & Sons, Ltd.

T his paper examines how firm investments in technology-based employee monitoring impact both misconduct and productivity. We use unique and detailed theft and sales data from 392 restaurant locations from five firms that adopt a theft monitoring information technology (IT) product. We use difference-in-differences models with staggered adoption dates to estimate the treatment effect of IT monitoring on theft and productivity. We find significant treatment effects in reduced theft and improved productivity that appear to be primarily driven by changed worker behavior rather than worker turnover. We examine four mechanisms that may drive this productivity result: economic and cognitive multitasking, fairness-based motivation, and perceived increases of general oversight. The observed productivity results represent substantial financial benefits to both firms and the legitimate tip-based earnings of workers. Our results suggest that employee misconduct is not solely a function of individual differences in ethics or morality, but can also be influenced by managerial policies that can benefit both firms and employees.

unethical behavior, judgment, ethics, equity, self-interest,