We propose that idiosyncratic benefits from adhering to social norms explain the heterogeneity in honesty documented in many situations where misrepresentation yields a financial benefit. Further, information about the honesty of one's peers modifies the descriptive norm and hence, one's own...

Given a standard moral hazard problem, the agent's optimal compensation can be cast as a function of either (i) the gross outcome, or (ii) the net outcome, which is the gross outcome net of the agent's compensation. Contracts based on the net outcome are important in practice because (i)...