Cheating and Loss Aversion: Do People Cheat More to Avoid a Loss?

Does the extent of cheating depend on a proper reference point? We use a real‐effort matrix task that implements a two (gain versus loss frame) times two (monitored performance versus unmonitored performance) between‐subjects design with 600 experimental participants to examine whether the extent of cheating is reference dependent. Self‐reported performance in the unmonitored condition is significantly higher than actual performance in the monitored condition–a clear indication of cheating. However, the level of cheating is by far higher in the loss frame than in the gain frame under no monitoring. The fear of a loss seems to lead to more dishonest behavior than the lure of a gain. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2015.2313. This paper was accepted by Uri Gneezy, behavioral economics.