The Unequal Diffusion of Honesty and Dishonesty in Workplace Networks

Honest and dishonest behaviors may both diffuse among the members of an organization. Knowing which of the two spreads faster is important because it impacts the extent to which managers will need to resort to other, potentially more costly solutions to curb dishonest behavior. Assessing empirically which of honest behavior or dishonest behavior spreads faster is challenging because this requires field measurements of social relationships and dishonest behavior of individual members, which poses both measurement and inference problems. We examine an original fine-grained data set from a large company that allows for identifying agents likely to be dishonest and interactions among employees while offering a natural experiment that circumvents the inference problems associated with identifying peer-to-peer diffusion. We find (1) that dishonest behavior diffuses, whereas honest behavior does not; (2) that diffusion likely operates through spreading information about opportunities for collusion; and (3) that policies that screen on dishonesty at hiring may be efficient to curb dishonest behavior in environments with high turnover. This paper was accepted by Lamar Pierce, organizations. Funding: R. Ferrali acknowledges support from the Mamdouha S. Bobst Center for Peace and Justice Grant 2016-12-Bobst, the French National Research Agency Grant ANR-17-EURE-0020, and Aix-Marseille University—A*MIDEX Excellence Initiative. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.01981 .