ABSTRACT
In a setting where employees can substitute economically costly effort with economically costless misreporting, we predict that prosocial incentives that promote a moral decision frame, compared with cash incentives that promote an economic decision frame, could theoretically motivate less misreporting, although the effects on effort are less certain. Using an experiment, we find that employees who misreport more also tend to choose lower effort. We also find that the variable prosocial contract results in lower reported output and less effort than the variable cash contract, in contrast to the insignificant differences in these variables between the fixed prosocial contract and the fixed cash contract. Lastly, we find that the variable prosocial contract results in lower misreporting than the variable cash contract when we control for the simultaneous effort choice, but not when we do not control for effort. We outline implications of these results for theory and practice.
Data Availability: Contact the authors.
JEL Classifications: C91; M41; M52.
