The Effect of Individual and Group Punishment on Individual and Group-Based Dishonesty

Economic dishonesty is a widespread behavior that has substantial implications on organizations and societies. Recent studies suggest that decision making in groups or commitment to other individuals can further increase such dishonesty in contrast to individual decision making. Various interventions have been suggested to curb dishonesty and the most classical economic approaches emphasize the use of punishment by focusing on both the risk (“how likely am I to get caught?”) and the severity (“what fine will be imposed?”) of punishment, respectively. However, the effects of punishments on dishonesty are mixed and it is currently unclear if punishment can be effective in collaborative settings. Here, we suggest to provide a high-powered online study (N = 630) collecting UK-based Prolific participants in which we manipulate (1) the type of payoff (whether dishonesty earns money for the individual or for the group), (2) the risk of punishment (no risk or 30% audit chance), and (3) the type of punishment (whether the individual is punished or the whole group in case of getting caught). The study will shed light on the interplay between individual or group decision making and the specifics of punishment as well as advance the understanding under which conditions punishment might be effective in curbing dishonesty.