The Art of the Steal

"Scammers don't cheat because they need the money--they cheat because they're cheaters." Interesting article in the Austin-American Statesman August 3, 2019 by behavioral economist Marco Palma (based on a published paper in Economic Behavior and Organization). He wanted to understand the role of money in financial frauds and conducted an experiment with Billur Aksoy, surprisingly using a coffee-growing village in Guatemala. During the harvest period the people were relatively prosperous, while money was scarce the rest of the year. The idea was to study the people during periods of prosperity and scarcity. Other studies showed that people cheat about the same rate in rich and poor countries. The participants rolled a six-sided die and were paid based on the number they claimed to roll, except 6 paid nothing--the researchers did not see the results. [This was somewhat similar to an experiment by Dan Ariely, who used a self-reported math test.] As expected, the participants claimed to role a high payoff number 85% of the time (50% the expected probability), with 5, the most lucrative, reported 50% of the time--thus, large scale cheating in both scarce and good times.

The game was repeated, but the beneficiary was someone else in the village; they reported a high payoff number 73% of the time during harvest period and 75% during scarcity. When playing for a stranger, the report dropped to the expected 50% during the harvest period, but rose to 70% during scarcity. The authors hypothesized that they became more empathetic during hard time, even for strangers. An unpublished study from Thailand found similar results. Their overall conclusion was that cheating is based mainly on people's ethics rather than wealth, consistent with studies that indicate a genetic predisposition for antisocial behavior and criminal activity. [I might add that peoples' ethics on average fall far short of Immanuel Kant's categorical imperative not to cheat.]