Why Do Goal-Based Incentives Cause Cheating? Unpacking the Confounding Effects of Goals, Social Comparisons and Pay

Recent studies suggest that goal-based incentive systems cause cheating. However, goal-based incentives comprise a number of distinct elements, including statement of a goal, the goal’s justification and framing, and rewards for meeting the goal. Previous experimental research has simultaneously varied several of these elements within a single condition, leading to interpretational confounds in assessing the impact of goal assignment on cheating. We use a carefully-designed 2x2x2 experiment that isolated cheating caused by assigning a goal, by providing peer comparison justifications, and by paying for performance. This design measures the individual impact of each element on cheating, and any possible interaction effects. We find that only pay-for-performance and peer comparison framing increased cheating, while the mere assignment of goals (without these other elements) did not. Our results suggest that care is necessary when examining the impact of incentive system elements on cheating, and that mere goals themselves do not cause cheating.