Differential Effects of Billing Styles on Workers’ Overbilling

Abstract

In four studies, we examine whether billing style (itemized vs. bulk bill) can influence instances of overbilling. Study 1, a field experiment, supported the hypothesis that an itemized billing style results in less unethical behavior. Specifically, we found that asking auto mechanics to itemize labor and parts to perform repairs rather than asking them for a lump sum cost figure led to estimates that were lower and closer to the industry standard recommended by AutoMD. Study 2, a laboratory study, demonstrated that asking participants to itemize their bills based on the number of units of work completed rather than the total amount of money earned decreased overbilling when the billing structure was a function of units completed. Studies 3 and 4, showed that asking participants to itemize their bills based on the number of minutes spent on the task rather than the bulk money earned decreased overbilling when the billing structure was by the minute. Moreover, felt accountability mediated this effect. Together, the results of these studies using different methods and participant populations demonstrate that billing style, in identical work and payoff structures, can influence ethical behavior. We discuss the implications of our findings for theory and practice.