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The Moral Costs of Production Externalities: An Experimental Analysis in a Workplace Setup
Last registered on October 15, 2020

Pre-Trial

Trial Information
General Information
Title
The Moral Costs of Production Externalities: An Experimental Analysis in a Workplace Setup
RCT ID
AEARCTR-0006443
Initial registration date
October 14, 2020
Last updated
October 15, 2020 12:35 PM EDT
Location(s)

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Primary Investigator
Affiliation
Halle Institute for Economic Research
Other Primary Investigator(s)
Additional Trial Information
Status
In development
Start date
2020-10-14
End date
2021-01-31
Secondary IDs
Abstract
Recent findings show that people care about the negative consequences their choices unfold on others. They often incur moral costs as they trade-off selfish motives against ethical concerns. However, these intrinsic costs are far from being steadfast and people often exploit moral wiggle room to justify selfish behavior in morally questionable situations. In this paper, we want to examine how employees react to the introduction of unethical but payoff-beneficial production externalities across different workplace settings. In our lab experiment, participants have the possibility to generate personal income for themselves by decoding letters in a simple real effort task. The explicit task compensation depends on the implemented production type. They either work under a high wage or under a low wage scheme. Working under the high wage, however, adversely affects the income of a passive third party. In particular, we are interested in whether employees justify selfish behavior (maximizing personal income under the production externality) across different workplace scenarios using a 2x2-treatment design.
External Link(s)
Registration Citation
Citation
Waibel, Joschka. 2020. "The Moral Costs of Production Externalities: An Experimental Analysis in a Workplace Setup." AEA RCT Registry. October 15. https://doi.org/10.1257/rct.6443-1.0.
Experimental Details
Interventions
Intervention(s)
Intervention Start Date
2020-11-01
Intervention End Date
2021-01-31
Primary Outcomes
Primary Outcomes (end points)
Our main dependent variable is the level of exerted effort (=number of encoded letters) by the employees under the high wage production (including the production externality)
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
In our lab experiment participants are randomly allocated into working groups of three - while each group consists of a randomly chosen manager and two regular employees. In the experiment, participants have the possibility to generate personal income by decoding letters in a simple real effort task (Erkral et al., 2011). The explicit compensation for each group member depends on the implemented production type. Production type “A” promises a high piece rate, while production type “B” offers a low piece rate. However, production under high compensation simultaneously creates a negative externality for a third passive party. Therefore, each participant who works under the high compensation is confronted with the internal conflict of balancing selfish motives (earning money) against ethical concerns (hurting the passive party). Starting from this basic group setup, we manipulate the underlying workplace scenario across two dimensions (2x2 treatment design). Our workplace variations allow us to study whether employees exploit moral wiggle room to justify selfish behavior (maximizing income). Consequently, our primary focus will lie on employees’ effort (absolute number of encoded letters) under production type “A” across our four workplace settings.
Experimental Design Details
Not available
Randomization Method
computer (group allocation, role assignment, treatment) and manual extraction from an urn (assignment to computer station in the lab)
Randomization Unit
computer (group allocation, role assignment, treatment) and manual extraction from an urn (assignment to computer station in the lab)
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
- we plan to recruit 360 subjects from a student pool at a German university
- this leaves us with 120 managers and 240 employees


Sample size: planned number of observations
- we plan to recruit 360 subjects from a student pool at a German university - this leaves us with 120 managers and 240 employees
Sample size (or number of clusters) by treatment arms
We plan to have around 30 groups in each of the four treatment arms - 30 managers and 60 employees
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
German Association for Experimental Economic Research e.V.
IRB Approval Date
2020-10-13
IRB Approval Number
N/A