![]() ![]() ![]() In particular, the individual may claim the win outcome even if the true lottery outcome is zero. The other condition allows for misreporting. Here, an individual’s attitude toward truth-telling is irrelevant. One condition is truthful by design, and the lottery outcome is identical to the individual’s final payout. Their lottery choice is recorded for two different conditions. Therefore, this WTP can be seen as a subtle way to measure the heterogeneity in lying costs. This WTP can reflect how badly different individuals suffer from making dishonest earnings. We elicit individuals’ willingness to pay (WTP) for the Good Lottery which has higher odds of having an opportunity to earn honestly instead of earning money through a misreporting opportunity. To obtain the Good Lottery instead, individuals have to pay a price. Let us refer to it as the ‘Good Lottery.’ The Bad Lottery is costless. The other lottery yields the zero outcome with a low probability and the win outcome with a high probability. One lottery, let us call it the ‘Bad Lottery,’ has a zero outcome with high probability and a win outcome with a low probability. We generate these insights from a theory-guided experiment in the laboratory in which individuals choose between two binary lotteries in two different choice conditions. Hence, abstracting from self-selection may lead to an underestimation of actual cheating behavior. Moreover, we show that the individual’s lying costs determine the self-selection. Are individuals willing to pay to earn in an honest fashion? How badly do they suffer as a side effect of dishonest earnings? How is this lying cost related to their choice between an honest earning opportunity and one that allows them to make more money, but only if they are prepared to cheat? Finally, is dishonest behavior the outcome of the misreporting opportunity per se, or is it rather the outcome of deliberate self-selection into such opportunities? In other words, do certain professions attract dishonest people, or is it the cheating opportunity that makes people dishonest? We provide causal evidence of a self-selection effect, and rule out that the mere likelihood of facing the cheating opportunity induces dishonest behavior. These considerations lead to empirical questions. Such a self-selection could occur according to an individual’s attitude toward honesty because money might stink for some, but not for others. On the other hand, it is also conceivable that individuals self-select deliberately ex ante into different professions with different degrees of cheating opportunities. On the one hand, it is conceivable that the mere existence of a cheating opportunity in a certain profession might induce dishonesty. Footnote 1 These opposites in the trustworthiness of different professions involve a deeper problem of causality. In contrast, professions with little potential for manipulation, such as firefighters or teachers, are among the most trustworthy professions globally. Typically, those professions with cheating opportunities, such as insurance agents, advertising executives but also politicians are the least trusted ones. Indeed, survey evidence indicates large differences in trust in different professions. This trait allows them to extract additional rents, and may make professions that allow for misreporting opportunities particularly attractive to them. While some people are incorruptible and will suffer from lying, others follow Vespasian’s adage and will cheat for personal gain without hesitation. ![]() One such impure source is dishonestly earned money. “Pecunia non olet” (money doesn’t stink), as the Roman emperor Vespasian said to alleviate concerns that a presumably impure source of money would lower its value. ![]()
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