Self-Fulfilling Prophecy? An Examination of Exposure to Economic Theory and Opportunistic Behavior
45 Pages Posted: 20 Aug 2013
Date Written: August 19, 2013
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: Suggested Citation