Abstract
While incentive framing has been shown to promote workers’ effort, little is known about how it affects other dimensions of the employer-employee relationship. This paper examines whether incentive framing can also influence workers propensity to engage in an activity disloyal to their employer: corruption. To do so, we conducted an experiment in which graders are offered a bribe to report a better grade. Three treatments are conducted by framing economically equivalent contracts as menus of bonuses, penalties, or bonuses and penalties. We find that graders are more corrupt when incentives are framed as a combination of bonuses and penalties, while no difference is found between the bonus and the penalty contracts. These results are inconsistent with both standard economic theory and labor reciprocity.
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