Self-Fulfilling Prophecy? An Examination of Exposure to Economic Theory and Opportunistic Behavior

45 Pages Posted: 20 Aug 2013  

Christian Mastilak

Xavier University - Department of Accountancy

Linda J. Matuszewski

Northern Illinois University

Fabienne Miller

Worcester Polytechnic Institute

Alex Woods

College of William and Mary

Date Written: August 19, 2013

Abstract

Authors have claimed that economics theory acts as a self-fulfilling prophecy, causing those who study it to become more like "economic actors," seeking to maximize their own wealth at the expense of others. Such authors claim that economic theory thus leads to unethical and scandalous behavior in business. Evidence on the effects of studying economics is mixed. We report the results of a quasi-experiment to test whether exposure to economics theory contributes to opportunistic behavior. In the first stage of our study, participants first played a game designed to invoke a competitive, wealth-maximizing economic frame or a cooperative, non-economic frame. In the second stage, participants engaged in tasks that required decisions to be made with ethical components (requesting funds in a budgeting task where untruthful reporting would be undetected and would result in financial gain; reallocating employee bonuses as a result of favoritism; putting workers out of jobs to boost earnings). We find an increase in opportunism among participants who were exposed to economics theory in either an experimental manipulation or prior economics coursework. We also find that prior coursework and our experimental manipulation function as substitutes for one another. We thus find some support for the claim that economics theory is a self-fulfilling prophecy. However, we do not find evidence that the self-fulfilling prophecy effect of economics theory results from decreased recognition of ethical issues among participants who have been exposed to economics theory. Our study contributes to our understanding of the effects of economics theory. Typical undergraduate microeconomics coursework produces opportunism effects similar to those generated by experimental manipulations done in the laboratory setting. This finding deserves further study.

Keywords: Ethics, Economics, Experiment, Opportunism

JEL Classification: A10, M41, A11, D63

Suggested Citation

Mastilak, Christian and Matuszewski, Linda J. and Miller, Fabienne and Woods, Alex, Self-Fulfilling Prophecy? An Examination of Exposure to Economic Theory and Opportunistic Behavior (August 19, 2013). AAA 2014 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=2312557 or http://dx.doi.org/10.2139/ssrn.2312557

Christian Mastilak (Contact Author)

Xavier University - Department of Accountancy ( email )

223 Smith Hall
3718 Ledgewood Drive
Cincinnati, OH 45207
United States
513-745-3290 (Phone)

Linda J. Matuszewski

Northern Illinois University ( email )

1425 W. Lincoln Hwy
Dekalb, IL 60115-2828
United States
815-753-6379 (Phone)
815-753-8515 (Fax)

Fabienne Miller

Worcester Polytechnic Institute ( email )

Worcester, MA 01609
United States
508-831-6128 (Phone)

Alex Woods

College of William and Mary ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States

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