Who Stands at the Top and Bottom of the Slippery Slope?

• In Event: Earnings Management and Financial Reporting

Abstract

Prior research argues that sequential decisions lead to a slippery slope toward unethical or fraudulent behavior, with little evidence to support such claims. We conduct two experiments which demonstrate the existence of the slippery slope in a controlled setting, and investigate how it leads “good people” (low-Machiavellians) to do “bad things.” The first experiment manipulates whether the potential to overstate personal performance in order to earn excess monetary compensation increases or decreases across two experimental tasks. We find that smaller initial incentives to cheat followed by larger subsequent incentives to cheat lead to greater subsequent cheating by low-Machiavellians. High-Machiavellians do not exhibit this slippery slope pattern of behavior. Our second experiment is similar to the first but also manipulates the length of time elapsing between the two experimental tasks in an attempt to determine whether the effects of cheating incentives on slippery slope behavior diminish over time. We again find evidence of slippery slope behavior among low-Ms when there is a short horizon between cheating opportunities, but not at the longer horizon. Our study confirms the existence of a slippery slope toward unethical behavior, highlights individual differences along an important personality trait, and suggests that slippery slope behavior is likely to be magnified when individuals are presented with frequent opportunities to cheat.

Authors

• Timothy Brown, University of Illinois at Urbana–Champaign

• Kristina Rennekamp, University of Illinois at Urbana–Champaign

• Nicholas Andrew Seybert, University of Maryland, College Park

• Wenjie Zhu, University of Maryland