Do Image Spillovers Deter Rule Breaking?

GATE LYON SAINT-ETIENNE, WP 1819 – September 2018

39 Pages Posted: 11 Oct 2018

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GATE Working Paper Series

Université de Lyon - Groupe d'Analyse et de Théorie Economique Lyon Saint-Etienne (GATE)

Rémi Suchon

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Daniel Houser

George Mason University - Department of Economics; Interdisciplinary Center for Economic Science

Date Written: September 18, 2018

Abstract

We test whether individuals internalize the effects that their behavior may have on the social image of their group. In our experiment, we recruit pairs of real-life friends and study whether rule breaking in the form of misreporting decreases when misreporting may have negative spillovers on the image of the friend. We find that participants hurt their friends' social image by misreporting because external observers update their beliefs: they rightfully expect that a participant whose friend misreported is likely to misreport himself. However, participants misreport as often when their behavior can hurt the friend's image as when it cannot, even though hurting their friends' image reduces their own monetary gains. Our interpretation is that they underestimate the impact of their behavior on external observers' beliefs about their friends. Our results cast doubts on the capacity of groups to sustain a good image absent the possibility of punishment, which is bad news. The good news is that external observers may use image spillovers to update their beliefs and interact with members of social groups more efficiently.

Keywords: Social image, Group image, Misreporting, Experiment

JEL Classification: C92, D91

Suggested Citation

Working Paper Series, GATE and Suchon, Rémi and Houser, Daniel, Do Image Spillovers Deter Rule Breaking? (September 18, 2018). GATE LYON SAINT-ETIENNE, WP 1819 – September 2018 . Available at SSRN: https://ssrn.com/abstract=3251348 or http://dx.doi.org/10.2139/ssrn.3251348

GATE Working Paper Series (Contact Author)

Université de Lyon - Groupe d'Analyse et de Théorie Economique Lyon Saint-Etienne (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France

HOME PAGE: http://www.gate.cnrs.fr/

Rémi Suchon

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

Daniel Houser

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

Interdisciplinary Center for Economic Science ( email )

5th Floor, Vernon Smith Hall
George Mason University
Arlington, VA 22201
United States
7039934856 (Phone)

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