The effect of loss aversion and entitlement on cheating: An online experiment

We investigate how loss aversion and entitlement influence lying. We conduct an online experiment with a cheating task in which participants draw and report a number. Participants can cheat by reporting a different number to earn a higher payoff. We vary whether participants perform (or not) a real effort task to generate their endowment before the cheating task to evoke a sense of entitlement, and whether participants can cheat for an additional gain or to avoid a loss using a 2 (earned/not earned endowment) x 2 (loss/gain) design. We find no effect of loss aversion on cheating and only weak evidence of a prior stage of real effort on lying behavior. Furthermore, we find a correlation between real effort task performance and lying, but only in the gain domain. This is the first study to look at how entitlement affects cheating behavior in both the gain and loss domains.