Do Leaders Affect Ethical Conduct?

University of Zurich, Department of Economics, Working Paper No. 167

62 Pages Posted: 23 Jul 2014

See all articles by Giovanna D'Adda

Giovanna D'Adda

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Donja Darai

University of Zurich - Department of Economics

Roberto A. Weber

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: July 14, 2014

Abstract

We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct-prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders' strategies reveals that leaders' statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders' propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.

Keywords: Leadership, ethics, dishonesty, experiment

JEL Classification: C92, C72, D03

Suggested Citation

D'Adda, Giovanna and Darai, Donja and Weber, Roberto A., Do Leaders Affect Ethical Conduct? (July 14, 2014). University of Zurich, Department of Economics, Working Paper No. 167, Available at SSRN: https://ssrn.com/abstract=2469782 or http://dx.doi.org/10.2139/ssrn.2469782

Giovanna D'Adda (Contact Author)

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy

Donja Darai

University of Zurich - Department of Economics ( email )

Bluemlisalpstrasse 10
Zurich, 8006
Switzerland

Roberto A. Weber

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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