A Multi-Method Approach to Identifying Norms and Normative Expectations within a Corporate Hierarchy: Evidence from the Financial Services Industry

This paper presents the results of a field study at a large financial services firm that combines multiple methods, including two economic experiments, to measure ethical norms and their behavioral correlates. Standard survey questions eliciting ethical evaluations of actions in on-the-job ethical dilemmas are transformed into a series of incentivized coordination games in the first experiment. We use the results of this experiment to identify the actual ethical norms for financial adviser behavior held by key personnel – financial advisers and their corporate leaders – in three settings: a clash of incentives between serving the client and earning commissions, a dilemma about fiduciary responsibility to a client, and a dilemma about whistle-blowing on a peer. We also measure the beliefs of financial advisers about the ethical expectations of their corporate leaders and the beliefs of corporate leaders about financial adviser norms. In addition, we ask financial advisers about their personal normative opinions, matching a common methodology in the literature. We find, first, systematic agreements in the normative evaluations across the corporate hierarchy that are consistent with ex ante expectations, but second, we also find some measurable differences between the normative expectations of corporate leaders about on-the-job behavior and the actual norms shared among financial advisers. When there is a normative mismatch across the hierarchy we are able to distinguish miscommunication from ethical disagreement between leaders and employees. Our subjects also report their job satisfaction and take part in a second incentivized experiment in which it is costly to report private information honestly. A last finding is that a mismatch between advisers’ personal ethical opinions and corporate norms – especially those of peers – strongly correlates with job dissatisfaction, and less strongly but significantly with the willingness to be dishonest.field experiment, financial services, corporate leader, financial adviser, ethics, norms, coordination game

Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary?

We explore the influence of social norms on behavior. To do so, we introduce a method for identifying norms, based on the property that social norms reflect social consensus regarding the appropriateness of different possible behaviors. We demonstrate that the norms we elicit, along with a simple model combining concern for norm-compliance with utility for money, predict changes in behavior across several variants of the dictator game in which behavior changes substantially following the introduction of minor contextual variations. Our findings indicate that people care not just about monetary payoffs but also care about the social appropriateness of any action they take. Our work also suggests that a social norm is not always a single action that should or should not be taken, but rather a profile of varying degrees of social appropriateness for different available actions.norms, matching games, dictator games

Savings of young parents

In this paper, we examine household savings using data from the National Longitudinal Survey, Cohort 1997 (NLSY97). This data set provides detailed information about assets and liabilities of parents with teen-age children and allows researchers to examine patterns of accumulation at early stages of the life cycle. In our empirical work, we have first to deal with several problems in measuring wealth. While many respondents report owning assets and liabilities, they often do not report their values. This problem is severe, in particular among financial assets. It is also difficult to devise an appropriate measure of accumulation when examining young parents, since assets and liabilities display different degrees of liquidity. To get around the non-response problem, we impute the missing values for assets and liabilities. This allows us to calculate household wealth for the whole sample. We examine household wealth holdings by considering several measures of accumulation: total (non-pension) net worth, financial net worth, and retirement savings. We study their distribution across different demographic groups and show that many households, in particular those headed by young parents (younger than 35), minorities, and individuals with low educational attainment, display very little accumulation. Many have no financial assets and their total net worth is also low. Housing equity is the main asset in many household portfolios and often the only asset families own. Overall, there is much heterogeneity in wealth holdings not only across but also within demographic groups. This suggests that many factors are at play in shaping the wealth accumulation of parents with young children.Wealth ; Saving and investment

Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary?

We introduce an incentivized elicitation method for identifying social norms that uses simple coordination games. We demonstrate that concern for the norms we elicit and for money predict changes in behavior across several variants of the dictator game, including data from a novel experiment and from prior published laboratory studies, that are unaccounted for by most current theories of social preferences. Moreover, we find that the importance of social norm compliance and of monetary considerations is fairly constant across different experiments. This consistency allows prediction of treatment effects across experiments, and implies that subjects have a generally stable willingness to sacrifice money to take behaviors that are socially appropriate.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/98296/1/jeea12006.pd

A multi-method approach to identifying norms and normative expectations within a corporate hierarchy: Evidence from the financial services industry

This paper presents the results of a field study at a large financial services firm that combines multiple methods, including two economic experiments, to measure ethical norms and their behavioral correlates. Standard survey questions eliciting ethical evaluations of actions in on-the-job ethical dilemmas are transformed into a series of incentivized coordination games in the first experiment. We use the results of this experiment to identify the actual ethical norms for financial adviser behavior held by key personnel - financial advisers and their corporate leaders - in three settings: a clash of incentives between serving the client and earning commissions, a dilemma about fiduciary responsibility to a client, and a dilemma about whistle-blowing on a peer. We also measure the beliefs of financial advisers about the ethical expectations of their corporate leaders and the beliefs of corporate leaders about financial adviser norms. In addition, we ask financial advisers about their personal normative opinions, matching a common methodology in the literature. We find, first, systematic agreements in the normative evaluations across the corporate hierarchy that are consistent with ex ante expectations, but second, we also find some measurable differences between the normative expectations of corporate leaders about on-the-job behavior and the actual norms shared among financial advisers. When there is a normative mismatch across the hierarchy we are able to distinguish miscommunication from ethical disagreement between leaders and employees. Our subjects also report their job satisfaction and take part in a second incentivized experiment in which it is costly to report private information honestly. A last finding is that a mismatch between advisers' personal ethical opinions and corporate norms - especially those of peers - strongly correlates with job dissatisfaction, and less strongly but significantly with the willingness to be dishonest

“When in Rome”: identifying social norms using coordination games

Previous research in economics, social psychology, and sociology has produced compelling evidence that social norms influence behavior. In this paper we apply the Krupka and Weber (2013) norm elicitation procedure and present U.S. and non-U.S. born subjects with two scenarios for which tipping and punctuality norms are known to vary across countries. We elicit shared beliefs by having subjects match appropriateness ratings of different actions (such as arriving late or on time) to another randomly selected participant from the same university or to a participant who is born in the same country. We also elicit personal beliefs without the matching task. We test whether the responses from the coordination task can be interpreted as social norms by comparing responses from the coordination game with actual social norms (as identified using independent materials such as tipping guides for travelers). We compare responses elicited with the matching tasks to those elicited without the matching task to test whether the coordination device itself is essential for identifying social norms. We find that appropriateness ratings for different actions vary with the reference group in the matching task. Further, the ratings obtained from the matching task vary in a manner consistent with the actual social norms of that reference group. Thus, we find that shared beliefs correspond more closely to externally validated social norms compared to personal beliefs. Second, we highlight the importance that reference groups (for the coordination task) can play

Confirmatory Factor Analysis Comparing Incentivized Experiments With Self‑Report Methods to Elicit Adolescent Smoking and Vaping Social Norms

Many adolescent smoking prevention programmes target social norms, typically evaluated with self-report, susceptible to social desirability bias. An alternative approach with little application in public health are experimental norms elicitation methods. Using the Mechanisms of Networks and Norms Influence on Smoking in Schools (MECHANISMS) study baseline data, from 12–13 year old school pupils (n = 1656) in Northern Ireland and Bogotá (Colombia), we compare two methods of measuring injunctive and descriptive smoking and vaping norms: (1) incentivized experiments, using monetary payments to elicit norms; (2) self-report scales. Confirmatory factor analysis (CFA) examined whether the methods measured the same construct. Paths from exposures (country, sex, personality) to social norms, and associations of norms with (self-reported and objectively measured) smoking behavior/intentions were inspected in another structural model. Second-order CFA showed that latent variables representing experimental and survey norms measurements were measuring the same underlying construct of anti-smoking/vaping norms (Comparative Fit Index = 0.958, Tucker Lewis Index = 0.951, Root Mean Square Error of Approximation = 0.030, Standardized Root Mean Square Residual = 0.034). Adding covariates into a structural model showed significant paths from country to norms (second-order anti-smoking/vaping norms latent variable: standardized factor loading [β] = 0.30, standard error [SE] = 0.09, p \u3c 0.001), and associations of norms with self-reported anti-smoking behavior (β = 0.40, SE = 0.04, p \u3c 0.001), self-reported anti-smoking intentions (β = 0.42, SE = 0.06, p \u3c 0.001), and objectively measured smoking behavior (β = − 0.20, SE = 0.06, p = 0.001). This paper offers evidence for the construct validity of behavioral economic methods of eliciting adolescent smoking and vaping norms. These methods seem to index the same underlying phenomena as commonly-used self-report scales

The Personality and Cognitive Traits Associated with Adolescents’ Sensitivity to Social Norms

Little is known about the personality and cognitive traits that shape adolescents’ sensitivity to social norms. Further, few studies have harnessed novel empirical tools to elicit sensitivity to social norms among adolescent populations. This paper examines the association between sensitivity to norms and various personality and cognitive traits using an incentivised rule-following task grounded in Game Theory. Cross-sectional data were obtained from 1274 adolescents. Self-administered questionnaires were used to measure personality traits as well as other psychosocial characteristics. Incentivised rule-following experiments gauged sensitivity to social norms. A series of multilevel mixed effects ordered logistic regression models were employed to assess the association between sensitivity to norms and the personality and cognitive traits. The results highlighted statistically significant univariate associations between the personality and cognitive traits and sensitivity to norms. However, in the multivariate adjusted model, the only factor associated with sensitivity to norms was gender. The gender-stratified analyses revealed differences in the personality and cognitive traits associated with sensitivity to norms across genders. For males need to belong was significantly negatively associated with sensitivity to norms in the multivariate model. By comparison, emotional stability was negatively associated with sensitivity to norms for females. This study reinforced the findings from an earlier study and suggested female adolescents had higher levels of sensitivity to norms. The results indicated no consistent pattern between sensitivity to norms and the personality and cognitive traits. Our findings provide a basis for further empirical research on a relatively nascent construct, and bring a fresh perspective to the question of norm-following preferences among this age group

Credit Constraints and the Measurement of Time Preferences

Incentivized experiments are commonly used to estimate marginal rates of intertemporal substitution (MRS) in the lab and in the field in order to make inferences about individual time preferences. This paper considers an integrated model of behavior in which individuals are subject to financial shocks and credit constraints, and take those into account when making experimental choices. The model shows that measured MRS depends on the individual’s effective interest rate which is equal to the relative marginal utility of current and future consumption. Experimental responses should therefore be correlated with other variables that describe the subject’s financial situation, like savings and shocks to income and consumption. We test the model using a new a panel data set from Mali and find evidence for such effects. Our results imply that the relationship between experimentally elicited MRS and time preferences is not straightforward. However, measured MRS can be useful in determining the importance of different types of financial shocks to the household

The Limits to Moral Erosion in Markets: Social Norms and the Replacement Excuse

This paper studies the impact of a key feature of competitive markets on moral behavior: the possibility that a competitor will step in and conclude the deal if a conscientious market actor forgoes a profitable business opportunity for ethical reasons. We study experimentally whether people employ the argument "if I don’t do it, someone else will" to justify taking a narrowly self-interested action. Our data reveal a clear pattern. Subjects do not employ the "replacement excuse" if a social norm exists that classifies the selfish action as immoral. But if no social norm exists, subjects are more inclined to take a selfish action in situations where another subject can otherwise take it. By demonstrating the importance of social norms of moral behavior for limiting the power of the replacement excuse, our paper informs the long-standing debate on the effect of markets on morals