The psychology of cheating: Why big businesses get the short end

Jareef Bin Martuza
Are consumers more likely to cheat big businesses than small ones? Jareef Bin Martuza and DIG colleagues has studied the question.
By Maria Borghans Karlsen

11 September 2024 11:34

The psychology of cheating: Why big businesses get the short end

A new DIG study looks into dishonesty among consumers, in relation to business-size bias.

“We wanted to have a more applied project, in terms of what type of firms people might be more likely to cheat”, explains PhD candidate Jareef Bin Martuza.

Together with professors Hallgeir Sjåstad and Helge Thorbjørnsen, they explore how the size of a business, influences people’s moral decisions.  

The decision to use business size as an indicator in the study, came from the idea that size is a very clear signal, that is present in the marketplace. Therefore, Martuza thought it would be interesting to test if people would be more likely to cheat big firms, than small firms.  

Pokémon’s moral lesson 

In the first year of his PhD, Martuza worked on a project evaluating how different interventions or nudges, can make people behave more honestly. However, they found that none of the tools worked.  

“That got me thinking, that maybe we don't understand the psychology of dishonesty well enough. If we want to come up with ways to make people more honest, we might need to understand dishonesty better.” 

Martuza explains that the idea might go all the way back to when he was in the 4th grade, trading Pokémon cards. Martuza and a friend of his, realized that after every Pokémon episode aired on TV, the demand for the Pokémon that lost the battles in that episode, dropped.   

Therefore, they decided they would buy the cards of the losing Pokémons. The next time the Pokémon would win, they would then sell the cards for a profit.  

“However, we decided that we were not going to make these trades with kids from our grade or lower, only the older kids. In hindsight, we might have thought this because it felt less bad to profit off those who are bigger, stronger, and arguably smarter.”  

Even though Martuza does not exchange Pokémon cards anymore, there seem to be some parallels between his childhood “business”, and the big versus small firm study.  

“A similar psychology, that it probably feels worse to kick the little guy, could also apply to customer dishonesty. Maybe we find it easier to not see big and powerful targets as victims, because we think that it's not gonna affect them.”  

A long process

The research itself, involved seven experiments conducted with 5,760 participants in the U.S. The experiments were designed to test whether people would act more dishonestly toward large businesses than smaller ones, and to see how strongly perceptions of vulnerability and morality could explain this behavior.  

The team set up controlled scenarios, such as website evaluation tasks, where participants were asked to evaluate pieces of website content of a supposedly big or small business. Subtle cues, like the number of employees or the size of the business, were used to emphasize the difference in size. 

“I think designing the experiments, was what took the longest time. Because we had to make sure that aspects other than size were as similar as possible across the big and small companies. We maintained tight controls because otherwise, we wouldn't really know if it's the size or something else, that is driving the results. The writing and polishing part is still ongoing, so we’ll see.” 

Acting against economic logic  

In the end, the study revealed a pattern: people actually are more likely to act dishonestly toward large businesses, compared to small ones.

Across multiple experiments, participants were more inclined to cheat larger organizations, driven by the perception that these businesses are less vulnerable and less moral.  

More dishonesty against big businesses

To Martuza’s surprise, even when actual money was at stake, participants demonstrated this bias, choosing to lie more frequently when they believed their gain came at the expense of a big business.

This went against the purely economic logic, which would suggest that a rational, selfish person would cheat all businesses equally, regardless of size. And also against the moral logic that a «good person» would not cheat any business irrespective of size.  

“Firms could benefit from signaling some vulnerability” 

The study raises important questions about how businesses communicate their size. While large companies often project their size as a sign of trustworthiness and stability, this research suggests that such signals might backfire.  

“I think firms could benefit from signaling some vulnerability. The message could be that, yes, we are big and you can trust us, but it doesn't mean that we are invulnerable and that we wouldn't be affected by dishonest customer behavior.” 

“After all, there are real people behind the company, such as owners, employees, and their families. If the firm’s bottom line gets hurt, actual people may get laid off or their salaries decreased.” 

In this way, the study underscores the importance for large businesses to rethink how they project their size. By balancing their image of strength, with a touch of vulnerability, they might maintain trustworthiness while mitigating consumer dishonesty. 

Jareef Bin Martuza defends his thesis: Essays in Moral Decisions on Thursday 12 September at NHH 

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