A new German study finds that groups of people are more likely than individuals to engage in dishonest behavior, especially when money is involved. The findings are published in the journal Management Science.

When companies are caught engaging in large-scale deceptive or corrupt behavior, it is often not the actions of one or two employees, but a coordinated effort of many individuals, including upper level management. Major examples include the bankruptcies of WorldCom and Enron, and even more recently, the alleged issuance of faulty emissions certificates by German car manufacturer Volkswagen.

The study investigated what motivates a group of people, especially those who previously behaved honestly, to work together to deceive.

The researchers from Ludwig-Maximilians-University of Munich, Germany, evaluated 273 participants in both individual and group situations. Participants were shown videos of dice rolls and asked to report the number on each die. The higher the reported die roll, the more money they received.

Participants were evaluated on an individual basis and in two group settings (members were able to communicate through a chat feature). In one of the group situations, all members of the group were required to report the same die roll to receive the money. In the other group setting, the members did not have to report the same die roll to receive a payoff.

“We observed that groups lie significantly more than individuals when group members face mutual financial gain and have to coordinate an action in order to realize that financial gain,” said author Dr. Martin G. Kocher.

A total of 78 groups participated in the study. Among these, arguments for dishonesty were explicitly mentioned in 51 percent of the group chats. In fact, of the messages that were exchanged among group members, 43.4 percent argued for dishonest reporting, while only 15.6 percent consisted of arguments for honesty.

In addition, the number of individuals in each group who had exhibited dishonest behavior in the individual portion of the study had no real impact on the final outcome. In fact, dishonesty occurred even in groups where all members had previously responded honestly.

“The ability for group members to exchange and discuss potential justifications for their dishonest behavior can create an overall shift in the group’s beliefs of what constitutes moral behavior,” said doctoral student and co-author Lisa Spantig.

C0-author Dr. Simeon Schudy added, “This allows them to establish a new norm regarding what does or does not constitute dishonest behavior.”

Source: Institute for Operations Research and the Management Sciences