How does a subordinate react to the superior’s well-intended action when it is not certain that it will produce the intended outcome? The risk associated with the outcome creates moral wiggle room and thus poses a threat to the gift exchange between the superior and the subordinate. In a...

Incentives are widely used to increase people's effort and thus performance. Whileacademic achievement depends heavily on effort, there is little empirical evidence onhow students respond to incentives other than grades and monetary rewards. We drawon two natural experiments that occurred at a...

We benefit from the Bologna reform to show how course and program policies affect academic achievement. We examine two similar programs at the business school of a major European university, which were both reformed. Time lags in the reforms allow us to estimate the difference in the differences...

We examine in a lab experiment whether people are more honest in public than in private. We find that outcome-minded subjects lie less in public to conform with expectations about others' behavior, which are ironically false. Rule-minded subjects, in turn, do not respond to public scrutiny....

We conducted a laboratory experiment to examine how honesty depends on social distance. Participants cast dice and reported the outcomes to allocate money between themselves and fellow students or the socially distant experimenter. They could lie about outcomes to earn more money. We found that...

Capital rationing and reporting are often combined to allocate resources in firms. Trust in managers' honest reports and distrustful control create an interesting tension. How do managers respond to this ambivalence of trust and control? We develop an analytical model to predict, first, that...

This study investigates the sabotage of investments in response to hurdle contracts as a means of formal control in capital budgeting. We conduct a laboratory experiment to examine factors that drive or inhibit sabotage. Sabotage occurs when the manager provides false information to prevent the...