Literature Review On Behavioral Contagion

During the last two decades, economic studies have gradually taking into account the once neglected aspect of social contexts in decision making, or as Elliot Aronson (2011) embodied this notion in his book's title that individuals are social animals. Our understanding of the decision making process is becoming more realistic by taking into account the importance of individual's identity, norms, as well as other-regarding preferences (cf. Rabin (1993), Fehr & Schmidt (1999), Akerlof & Kranton (2000), Bolton & Ockenfels (2000), Charness & Rabin (2002), Bénabou & Tirole (2011)). By regarding to these socially inseparable features of the economic environment, we were able to realize and understand the important relevance of not just the individual

The existing literatures referred in this chapter are focusing on result from the lab experiment. While attempting to be as inclusive as possible, the main focus of this chapter will be on dishonesty and (un)ethical behavior.
Several concepts in economics and psychology that serve as explanations for behavioral con-tagion include social decisions and social distance (Akerlof, 1997), (Glaeser & Scheinkman, 2004); social status and conformity (Bernheim, 1994); imitation of behavior (Alós-Ferrer & Schlag, 2009); social learning (Bandura, 1971); norms (Cialdini et al., 1990); vicarious self-perception (Goldstein & Cialdini,2007). (Kandel & Lazear, 1992) even provided an argument that peer pressure may contain shame and guilt which in turn affect behavioral contagion. These concepts despite differences in verbal expressions, are not so strictly exclusive from each other, in both their conclusions and assumptions. As a result, the aim of this paper is not to determine which concept is the best in describing behavioral contagion but rather to eluci-date the mechanisms behind it, particularly in the extent of unethical

As mentioned above, the chal-lenges that observational studies have been facing are the identification problems of the ef-fects in a clean way, thus the methodological conversion to laboratory experiment is inevita-ble. The controlled lab environment is still the paragon in eliminating confounds and minimiz-ing noise (Angrist, 2014). After all, if there is no effect to be found under controlled settings, there is no basis to believe that it exists in the outside complex environment. As (Falk & Ichino, 2006, p. 40) said "… even if the setting offers an almost perfect opportunity to identify peer effects in many of these studies, the impossibility of controlling for all local or personal confounding factors and for endogenous sorting makes the identification strategy not fully convincing". As mentioned by (Dimant, 2015), the pioneers of laboratory research focusing on peer effects and social identification are (Hoffman, McCabe & Smith (1996) and Bohnet & Frey (1999). These studies have shown the relevance of social identification in giving decision. Since then peer effects have found to influence individual behaviors in many different contexts such as: Falk & Ichino (2006), Mas & Moretti (2009) and (Georganas, et al., 2013) on productivity, Gächter et al. (2012) on reciprocal behavior under observability of other peer's