Incentive Effects on Ethics

Abstract

We review and synthesize research on the effects of incentives on ethical and unethical behavior. Our review of 361 conceptual and empirical articles, which are scattered across multiple disciplines (e.g., management, psychology, economics, education, healthcare delivery), reveals wide variation in how they conceptualize key concepts (i.e., incentives, ethics), how they theorize the effects, and what samples and research methods they use in empirical tests. We identify seven conceptual explanations that explain the link between incentives and unethicality, and synthesize them into three primary processes: cost-benefit comparison, motivated reasoning, and decreases in prosocial motivation. Our review of empirical evidence shows that some effects are relatively more established (e.g., goal-driven motivated reasoning) than others (e.g., prosocial motivation decline), but they all await more field (vs. laboratory experiments) evidence. In addition, giving substantial attention to the forms of unethicality in specific contexts, we show whether and how the effects of incentives on unethicality vary by professional domains, especially in education, healthcare delivery, and for-profit business. Building on the review, we present a multilevel, cyclical process model capturing how incentives and unethicality are related. We conclude by identifying opportunities for future research.