Rotten Apples and Sterling Examples: Norm-Based Moral Reasoning and Peer Influences on Honesty

We develop a general norm-dependent utility function with disutility for actions that are inferior or superior to a norm. We test its validity by assessing the moderating role of norm sensitivity in explaining responses to peer influences in a budget reporting experiment. Managers become less honest after seeing a less honest peer (the rotten apple effect) and more honest after seeing a more honest peer (the sterling example effect). We measure the sensitivity to social norms by the Maintaining Norms Schema score generated from the responses to the Defining Issue Test-2 moral reasoning questionnaire. We find that (1) the sterling example effect is significantly increased in an individual’s sensitivity to social norms and (2) the rotten apple effect does not vary significantly with an individual’s sensitivity to social norms. Our evidence supports inclusion of a disutility component for actions that are inferior to the norm in representations of personal preferences.

Steven Huddart, Hong Qu; Rotten Apples and Sterling Examples: Norm-Based Moral Reasoning and Peer Influences on Honesty. Journal of Management Accounting Research 1 July 2024; 36 (2): 123–140. https://doi.org/10.2308/JMAR-2022-011

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Work Title Rotten Apples and Sterling Examples: Norm-Based Moral Reasoning and Peer Influences on Honesty
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Open Access
Creators
  1. Steven Huddart
  2. Hong Qu
License In Copyright (Rights Reserved)
Work Type Article
Publisher
  1. Journal of Management Accounting Research
Publication Date July 1, 2024
Publisher Identifier (DOI)
  1. https://doi.org/10.2308/JMAR-2022-011
Deposited January 24, 2025

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