when foul play seems fair meritocratic un fairness and dis honesty
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When Foul Play Seems Fair: Meritocratic (Un)Fairness and ( Dis )Honesty. Fabio Galeotti (University of East Anglia) Reuben Kline (Stony Brook University) Raimondello Orsini (University of Bologna). Lorentz Center, NorMAS Workshop 2013. Belief in a Just World and Redistribution.

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when foul play seems fair meritocratic un fairness and dis honesty

When Foul Play Seems Fair: Meritocratic (Un)Fairness and (Dis)Honesty

Fabio Galeotti (University of East Anglia)

Reuben Kline (Stony Brook University)

Raimondello Orsini (University of Bologna)

Lorentz Center, NorMAS Workshop 2013

belief in a just world and redistribution
Belief in a Just World and Redistribution
  • Belief in a Just World (BJW) is the belief that deserving people are rewarded and undeserving people are punished. Under BJW, salient injustice causes a type of cognitive dissonance which one resolves through rationalization or action.
  • BJW (partly) explains cross-national (US vs. West Europe) variation in degrees of re-distribution: those who are more likely to believe that income is a result of “luck and connections” are more likely to support redistribution (Alesina & Angeletos, 2005).
  • Early adolescents begin to develop a sense of fair inequality; younger children tend to be strict egalitarians (Almas et al., 2010)
inequality inequity and dishonesty
Inequality, Inequity and Dishonesty
  • Inequality in many cases is often confounded by inequity (unfairness). Inequality can in principle be fair or unfair.

Under BJW, unfairness might trigger a redistributive reaction.

  • Our argument is that if the income distribution is considered to be unfair, citizens are more likely to view circumvention of the “rules of the game” – that is dishonesty and corruption - as justified.

Meritocratic fairness  honesty

Meritocratic unfairness  dishonesty

related literature
Related Literature
  • In Hoffman et al. (1994), subjects earn right (quiz performance) to be proposer in ultimatum game.
  • Zizzo (2003) “Inequality and procedural fairness in a money burning and stealing experiment”.
  • Almas et al. (2010) modified dictator game in which endowment is earned through an effort task
  • Rustrom & Williams (2000), investigate preferences for redistribution after earning money in a “Tower of Hanoi task” (meant to differentiate effort and productivity)
  • Konow et al. (1996, 2000, 2005 etc) origin of endowment and PGG contribution, “accountability principle
  • Ruffle (1997): exogenous (coin flip) vs. endogenous (skill-testing contest) endowments in dictator and ultimatum games
experimental details
Experimental Details
  • Experimental sessions:
    • University of Bologna, Forlí Campus (June, 2011 and February 2013): 164 subjects
    • Stony Brook University, NY (April and November, 2012): 144 subjects
  • Average payments: about €11.50 at Forlí and about $17 at SBU
  • Computerized experiment (z-Tree)
  • Duration: 30-40 minutes
experimental design
Experimental Design
  • Three stages:
    • Stage 1: Real-effort task to measure performance/effort and assign initial endowments
    • Stage 2: Dishonesty stage (in pairs)
    • Stage 3: Real-effort task as in Stage 1
  • Between-subjects manipulation of initial endowments’ allocation and pairing:
stage 1 real effort task
Stage 1: Real-effort task
  • Real-effort task: counting the occurrences of letters “e” and “c” in each line of a text in German
  • A tedious task intended to elicit a sense of “property rights” over performance
stage 1 effort and payoff
Stage 1: effort and payoff
  • Subjects were instructed that:
    • At the end of the task, they will be divided into two groups, high performers and low performers, based on median performance;
    • their performance on the quiz will determine their initial endowment:
      • 3 out of 4 scenarios: Endowment (high performer) ≥ Endowment (low performer)
      • 1 out of 4 scenarios: Endowment (low performer) ≥ Endowment (high performer)
treatment ee equal equitable
Treatment EE: Equal & Equitable
  • Equal: Both high and low performers get the same payment
  • Equitable: In the following stage, subjects will be paired high-high and low-low (randomly)
  • Thus, the income distribution is both equal and equitable because all subjects are compensated equally and performed the same
  • Control for income effects: two sub-treatments:
    • EE high:
      • High performers receive $10 (€7) and low performers receive $10 (€7)
    • EE low:
      • High performers receive $3 (€2) and low performers receive $3 (€2)
treatment ei equal inequitable
Treatment EI: Equal & Inequitable
  • Equal: Both high and low performers get the same payment
  • Inequitable: In the following stage, subjects are paired high-low (randomly)
  • Thus, the income distribution, while equal, is arguably inequitable because the high performers receive compensation equivalent to the low performers, despite they know that their performance was higher
  • Control for income effects: two sub-treatments:
    • EI high:
      • high performers receive $10(€7) and low performers receive $10(€7)
    • EI low:
      • high performers receive $3(€2) and low performers receive $3(€2)
treatment ui unequal inequitable
Treatment UI: Unequal & Inequitable
  • High performers receive $3 (€2) and low performers receive $10 (€7)
  • Subjects are paired high-low (randomly)
    • Thus, the income distribution is both unequal and inequitable
treatment ue unequal equitable
Treatment UE: Unequal & Equitable
  • High performers receive $10 (€7) and low performers receive $3 (€2)
  • Subjects are paired high-low (randomly)
    • Thus, the income distribution, while unequal, is arguably equitable because the high performers receive greater compensation for their performance
stage 2 dishonesty stage
Stage 2: Dishonesty stage
  • Additional payment. Within each pair:
  • Participant A:
    • Owner of “escrow” account of $15 (€10)
  • Participant B:
    • Custodian of the account
stage 2 private signals and misrepresentation
Stage 2: Private Signals and Misrepresentation
  • The custodian receives a series of 25 binary signals
  • The signals are generated from a (symmetric) binomial distribution
  • Each signal is either red or green, but known only privately to each custodian
  • Each signal is meant to direct the custodian as to whether to transfer an amount, $0.60 (0.40€) to herself (green) or leave it for the owner of the account (red)
  • It is the recording of the signal that affects payoffs, not the signal itself - therefore the custodian can potentially misrepresent the signal
  • Practice rounds with forced input to learn the rules
behavioural hypotheses
Behavioural hypotheses
  • Procedural unfairness induces more dishonesty: UI > UE

2) Stronger effect in USA than in Italy, since American subjects should be more sensitive to meritocracy (WVS)

  • Dishonesty in US: UI ≥ EI > EE ≈ UE
  • Dishonesty in Italy: UI > EI ≈ EE ≈ UE
results rate of honesty
Results: rate of honesty

(No difference between EE high (EI high) and EE low (EI low)  we pool the data)

  • In aggregate, American subjects were more honest than Italian (Mann-Whitney p = 0.026)  mainly driven by EE and UE treatments
two types of misrepresentation
Two Types of Misrepresentation
  • negative dishonesty: reporting a signal as green when it is in fact red
  • positive dishonesty: reporting a signal as red when it is in fact green
  • as expected, we find much more negative dishonesty than positive dishonesty
results negative dishonesty
Results: negative dishonesty
  • In aggregate, no difference between Italy and US
results positive dishonesty
Results: positive dishonesty
  • In aggregate, US > Italy (p = 0.027)
results custodian s earnings
Results: custodian’s earnings
  • Italy: no difference across treatments
random effects logit italy and us
Random Effects Logit (Italy and US)
  • Dependent variable: public signal (1 = red, 0 = green)
to sum up
To sum up
  • We observe statistically significant differences between the Italian and the American sample
  • In the US, dishonesty is triggered mainly by perceived inequity/unfairness
  • In Italy dishonesty is higher on average, but is almost unrelated to equity/fairness
meritocracy and honesty survey evidence
Meritocracy and honesty: Survey Evidence
  • Data used from the World Values Survey across three waves
  • Dependent variable(s): on a scale of 1-10, how justifiable is:
    • cheating on one’s taxes if you have the chance
    • accepting a bribe in the course of your duties
  • Chief explanatory variable is, on scale of 1-10:
    • 1: “In the long run, hard work usually brings a better life.”
    • 10: “Hard work does not generally bring success – it is more a matter of luck and connections.”
multi level model results
Multi-level model: results
  • Greater degrees of (perceived) inequity and inequality (at the national level) are associated with a greater willingness to circumvent micro-level rules (accept bribes, cheat on taxes), even when controlling for income and corruption at the national level
  • This observational study shows that these factors are associated with one another
  • Our experimental results show that in the lab (and especially in the US) the inequity of the income distribution is associated with a greater degree of dishonesty, even when holding constant the inequality of the distribution.
random effects logit all
Random Effects Logit (All)
  • Dependent variable: public signal (1 = red, 0 = green)
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