Pecunia Non Olet: on the Self-Selection into (Dis)honest Earning Opportunities

54 Pages Posted: 23 Nov 2020 Last revised: 1 Jul 2021

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Tim Lohse

Berlin School of Economics and Law; Max Planck Institute for Tax Law and Public Finance; Berlin Centre for Empirical Economics (BCEE)

Sven A. Simon

Max Planck Institute for Tax Law and Public Finance

Date Written: November 19, 2020

Abstract

We study self-selection into earning money in an honest or dishonest fashion based on individuals' attitudes toward truthful reporting. We propose a decision-theoretic framework where individuals' willingness to pay for honest earnings is determined by their (behavioral) lying costs. Our laboratory experiment identifies lying costs as the decisive factor causing self-selection into honest earning opportunities for individuals with high costs and into cheating opportunities for those prepared to misreport. Our experimental setup allows us to recover individual lying costs and their distribution in the population.

Keywords: lying behavior, lying costs, misreporting, honest earnings, self-selection, laboratory experiment

JEL Classification: C91, D81, D91, K42

Suggested Citation

Konrad, Kai A. and Lohse, Tim and Simon, Sven A., Pecunia Non Olet: on the Self-Selection into (Dis)honest Earning Opportunities (November 19, 2020). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2020-14, Available at SSRN: https://ssrn.com/abstract=3733503

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

90-98 Goswell Road
London, EC1V 7RR
United Kingdom

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

Poschinger Str. 5
Munich, 81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, 53072
Germany

Tim Lohse

Berlin School of Economics and Law ( email )

Badensche Strasse 50-51
Berlin, D-10825
Germany

HOME PAGE: http://www.hwr-berlin.de/en/prof/tim-lohse

Max Planck Institute for Tax Law and Public Finance

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/public_economics/research_affiliates/tim_lohse.cfm

Berlin Centre for Empirical Economics (BCEE) ( email )

Sven A. Simon

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
72
Abstract Views
609
Rank
695,984
PlumX Metrics