Stable Preferences or Moral Accounting?

If I do something bad, do I compensate by doing good afterwards?

In my recent working paper (co-authored with Eberhard Feess), we contrast two effects that have been identified in the economic literature. The traditional approach to economics assumes a stability of preferences, which implies that if a person is of the "anti-social" type, then when faced with similar dilemmas, that person will demonstrate stable anti-social behavior. As the old saying goes:

"Once a thief always a thief"

Moral accounting?

A countervailing effect, however, is "Mental accounting", a.k.a "Moral Self-Licensing": people are known to balance their moral acts, such that good deeds might be followed by bad ones (i.e. the person sees himself as "licensed" to do bad) - and vice versa. Thus, we may expect that immoral acts are followed by moral ones.

The real question: which of these effects dominates?

Instead of testing which theory is correct, we assume that both effects may be in play. The real question is then: which of these effects dominates? Our lab experiment attempts to answer this question.

Check out our working paper

At the following link.