No abstract

No abstract

Competition among individuals comes in a variety of forms: for mates, for resources, and for prestige and recognition. Such competitive pressure can lead individuals to engage in unethical behavior in an effort to get ahead. There are several forms of cheating in which individuals may engage to improve their own outcome: they may lie about their own performance in a task and they may lie about others performance in a task. Our research is the first to examine how competition affects each of these two types of cheating behavior. We find that individuals are much more willing to cheat by lying about themselves than they are willing to sabotage another when under competitive pressure. JEL Classification: D03, C91Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.

Principals can attempt to get agents to perform certain actions preferable to the principal by using ex post punishments or rewards to align incentives. Field data is mixed on whether, and to what extent, such informal incentive contracting (paradoxically) crowds out efficient solutions to the agency problem. This paper explores, via a novel set of laboratory experiments, the impact of ex post incentives on informal contracts between principals and agents in bargaining environments in which there are gains from exchange and when there is an opportunity for the principal to relay a no-cost demand of the division of those gains. Incentive contracting in these environments does not crowd-out off-equilibrium cooperation, and at high incentive levels cooperation is crowded in.

It is well known in evolutionary game theory that population clustering in Prisoner's Dilemma games allows some cooperative strategies to invade populations of stable defecting strategies. We adapt this idea of population clustering to a two-person trust game. Without knowing it, players are typed based on their recent track record as to whether or not they are trusting (Players 1) and whether or not they are trustworthy (Players 2). They are then paired according to those types: trustors with trustworthy types, and similarly non-trustors with untrustworthy types. In the control comparisons, Players 1 are randomly repaired with Players 2 without regard to type. We ask: are there natural tendencies for people to cooperate more frequently in environments in which they experience more cooperation in comparison with controls? Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.