Determinants of Moral Judgments Regarding Budgetary Slack: An Experimental Examination of Pay Scheme and Personal Values
39 Pages Posted: 3 Sep 2009
Date Written: September 1, 2009
We study moral judgments regarding budgetary slack made by participants at the end of a participative budgeting experiment in which an expectation for a truthful budget was present. We find that participants who set budgets under a slack-inducing pay scheme, and therefore built relatively high levels of budgetary slack, judged significant budgetary slack to be unethical on average whereas participants who set budgets under a truth-inducing pay scheme did not. This suggests that the slack-inducing pay scheme generated a moral frame by setting economic self-interest against common social norms such as honesty or responsibility. We also find that participants who scored high in traditional values and empathy on a pre-experiment personality questionnaire (JPI-R) were more likely to judge significant budgetary slack to be unethical. These results suggest that financial incentives play a role in determining the moral frame of the budgeting setting and that personal values play a role in determining how individuals respond to that moral frame.
Keywords: Budgetary Slack, Moral Reasoning, Moral Judgment, Pay Scheme, Personal Values
JEL Classification: M41, M52, G31, D82
Suggested Citation: Suggested Citation