A Multi-Method Approach to Identifying Norms andNormative Expectations within a Corporate Hierarchy:Evidence from the Financial Services Industry

This paper presents the results of a field study at a large financial services firm that combinesmultiple methods, including two economic experiments, to measure ethical norms and theirbehavioral correlates. Standard survey questions eliciting ethical evaluations of actions in on-thejobethical dilemmas are transformed into a series of incentivized coordination games in the firstexperiment. We use the results of this experiment to identify the actual ethical norms for financialadviser behavior held by key personnel – financial advisers and their corporate leaders – in threesettings: a clash of incentives between serving the client and earning commissions, a dilemmaabout fiduciary responsibility to a client, and a dilemma about whistle-blowing on a peer. We alsomeasure the beliefs of financial advisers about the ethical expectations of their corporate leadersand the beliefs of corporate leaders about financial adviser norms. In addition, we ask financialadvisers about their personal normative opinions, matching a common methodology in theliterature. We find, first, systematic agreements in the normative evaluations across the corporatehierarchy that are consistent with ex ante expectations, but second, we also find somemeasurable differences between the normative expectations of corporate leaders about on-thejobbehavior and the actual norms shared among financial advisers. When there is a normativemismatch across the hierarchy we are able to distinguish miscommunication from ethicaldisagreement between leaders and employees. Our subjects also report their job satisfaction andtake part in a second incentivized experiment in which it is costly to report private informationhonestly. A last finding is that a mismatch between advisers’ personal ethical opinions andcorporate norms – especially those of peers – strongly correlates with job dissatisfaction, and lessstrongly but significantly with the willingness to be dishonest....