Breaking Bad: Malfunctioning Institutions Erode Good Behavior
We study whether malfunctioning institutions erode good behavior. In a large-scale online experiment, participants play a repeated cheating game. When we ask participants to report honestly and promise no control, we find little cheating. When control is introduced, low cheating rates remain. In our main treatment with a malfunctioning institution, participants do not know whether they are in the treatment with or without control. In this treatment, participants, who face no control, reach highest cheating rates. That is, a malfunctioning institution leads to more cheating than no institution at all. Our findings suggest a novel negative effect of unenforced laws.
Agne Kajackaite is guest of the WZB Research Area "Markets and Choice."
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