54 Pages Posted: 11 Sep 2007 Last revised: 3 Dec 2010
Date Written: November 1, 2010
Research in behavioral economics suggests that in addition to their traditional incentive effects, formal control systems can influence psychological motivations. We extend this literature by demonstrating experimentally that formal controls directly influence people’s sense of what behaviors are appropriate in the setting (personal norms), and indirectly alter people’s tendency to conform to the behavior of those around them (descriptive norms). These effects persist even after the controls are changed, so that the effects of current controls can be strongly influenced by past control strength. Our results support those who are incorporating psychological factors into principal-agent models (such as Fischer and Huddart ), and suggest that those models should be further modified to incorporate correlations between personal norms and conformity to descriptive norms.
Keywords: controls, conformity, social norms, crowding out, public goods
JEL Classification: C70, C72, H26, H41, M40
Suggested Citation: Suggested Citation
Tayler, William B. and Bloomfield, Robert J., Norms, Conformity, and Controls (November 1, 2010). AAA 2011 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1010167 or http://dx.doi.org/10.2139/ssrn.1010167