We report on a field experiment conducted in public transportation and on the streets of a large city to study whether there are cross-context spillover effects of monitoring and punishment institution on unethical behavior. In the experiment, we first observe dishonesty in a natural setting (fare evasion in public transport), and then we expose subjects to an opportunity for unethical behavior in a different setting (accepting undeserved money on the street). This enables us to test (i) whether sanctioning fraud has a deterrence effect on fare-dodgers when they are exposed to a new opportunity to misbehave, and (ii) whether being inspected has any effect on the behavior of honest passengers in the new context. Our results show that monitoring increases the unethical behavior of both fare-dodgers and non-fare-dodgers in the second unrelated context. The crowding-out effect of monitoring across contexts increases in the number of inspectors. Our experiment rules out traditional explanations related to negative reciprocity which are typically proposed in single-context settings, and shows the importance of considering the spillover effets of institutions across contexts.

The spillover effects of monitoring institution on unethical behavior across contexts (by Fabio Galeotti, Valeria Maggian & Marie-Claire Villeval)

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