Fishy Behavior: Evaluating Preferences for Honesty in the Marketplace

Abstract

The role of the market in shaping various forms of behavior is perhaps the fundamental issue facing behavioral economics today. This study conducts a field experiment in fish markets of Kolkata, India that are prone to widespread cheating by sellers and examines whether, and to what extent, intrinsic preferences for honesty influence outcomes in actual market transactions. Exploiting systematic exogenous variations in fish prices, an indicator of marginal economic benefit from cheating, the experiment uncovers an inverted U-shaped relationship between the fish price and the amount cheated. The results suggest that tastes for honesty can mitigate fraud in natural markets.

Keywords: Cheating, Markets, Field Experiment

JEL Classification: D82, C9