Heads again? Bankers caught cheating in coin-toss study
Researchers say financial workers got suspiciously lucky when asked to report their own results, suggesting culture 'lenient towards dishonesty'
How do you tell if a group of bankers is dishonest? Simply by getting them all to toss a coin.
The academics from the University of Zurich and the University of Chicago used a sample of 128 employees of an unnamed large bank, and split them into two groups. The first set of bankers were primed to start thinking about their job, with questions such as "what is your function at this bank?"
They were then asked to toss a coin 10 times, in private, knowing which outcome would earn them US$20 a flip. They then had to report their results online to claim any winnings.
Unsurprisingly perhaps, there was cheating - with the percentage of winning tosses coming in at an incredibly fortunate 58.2 per cent.
The study was not designed to detect individual cheaters, but researchers could calculate that slightly more than a quarter of the primed participants exaggerated their results.
Meanwhile, the second group completed a survey about their well-being that did not include questions relating to their professional life. They then flipped the coins, and threw up a quite astonishing finding: these bankers proved pretty honest, registering a win rate of 51.6 per cent.
Which department they worked in, whether it offered financial incentives, and how important competition was to the participants did not factor into the results, the study found.
What did seem to matter was how much they agreed with a statement that social status is primarily determined by financial success. Hearty accord was associated with reporting more successful outcomes of the coin toss.
Researchers were curious if the effect was isolated to the one anonymous bank, or to banking at large. They tested another 80 employees from a handful of other financial institutions.
"They didn't behave significantly differently than the ones from the large international bank," said fellow author Ernst Fehr, a behavioural economist at the University of Zurich.
And when they repeated the experiment with people from non-banking jobs, the difference between the primed and unprimed groups was insignificant.
That pointed researchers towards the banking culture.
"This suggests that the social norms in the banking industry tend to be more lenient towards dishonest behaviour and thus contribute to the reputational loss in the industry," said co-author Michel Andre Marechal, also of the University of Zurich.
"These are not generally dishonest people," said University of Chicago behavioural economist Alain Cohn, lead author of the study. "What our results suggest is that current norms in the banking industry tend to favour dishonesty and that the banks should initiate a change in norms."
