Ask one student to give money to another guy to invest it on your behalf, and it’s highly likely that you will learn more new and important facts about human behavior. This is the method employed by behaviorist researcher Ernst Fein from the Zurich University. He found out that penalties invented to protect people from deceit, in fact provoke more cheating. Majority of economic models are based upon the conception of irrational human behavior saying that people punish or reward others only if they think it is advantageous for themselves.
In fact, in everyday life we often observe human behavior contradicts the concept: for instance, when people help those whom they will hardly ever meet in their life, or when they run risks in an attempt to punish others (like in case of verbal insulting).
This discrepancy between the theory and the reality is difficult for investigation, because the numerous traditions such as conclusion of juridical agreements, informal agreements and taking matrimonial oaths don’t let us find out what makes people keep the word or go back on it. To avoid traps of this kind, researchers Ernst Fein and Bettina Rockenbach from the University of Erfurt came to a student canteen. They offered students sitting in the canteen to participate in a gambling game. The group of students was divided into couples: one student lent money and the other borrowed it and promised to pay the sum back at the interest stipulated by the money lender.
Those students who borrowed money from their co-students also got a sum of money from organizers of the experiment; at that, the sum was twice as much as the borrowed sum. That is why it was not a problem for them to pay the debt.
The gambling followed three scenarios: in the first case, the money lenders threatened with financial penalties if the borrowers wouldn’t pay the sums back; in the second case, no penalty was stipulated for non-payment, although it was supposed that the penalty actually existed; the third scenario contained no penalty at all. In the situation when the penalty was stipulated distinctly, money was paid back more seldom. At that, payments were more frequent when absolutely no penalties were stipulated. Students performed the most honest payments of the credit in those cases when there were some penalties, but they were not specified in the agreements beforehand.
Translated by Maria Gousseva
Read the original in Russian: http://society.pravda.ru/society/2003/8/81/325/8512_obman.html
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