by
Fei Song, Ryerson University
Wednesday, June 4, 2014 | 12:30pm - 2:00pm | Room 335, HSBC Business School Building
Abstract
Classic agency theories in both economics and management literature focus on the isolated agent-principal duo without taking into account social contexts. In contrast, markets with increasing specializations and diverse professions demand embedded ties among agents where they exchange services, forming networks of mutual delegations. In three studies, we explore moral hazards arising from direct (e.g., A works for B and B works for A) and indirect reciprocal ties (e.g., A works B, B works for C, and C works for A), where agents confronting moral dilemmas are more likely to cross moral boundaries and engage in deception on behalf of principals than principals would condone themselves. We argue that this increased tendency for agents in reciprocal relationships to lie is driven by the (illusory) anticipation that their lies will be directly or indirectly reciprocated. Thus, although reciprocity fosters trust and cooperation it can also create an interlocked circle of deception.
