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Two decades of empirical evaluation have shown that corruption has a negative impact on economic growth, political stability, judicial effectiveness, democratization, educational attainment, and equality of income. However, corruption exists, persists, and varies significantly by culture. Lab studies have recently come to the forefront in identifying both the incentives and disincentives for corrupt behavior. However, lab studies on culture and corruption have led to some puzzling, contradictory results. This paper begins with a discussion of non-experimental work in this area, and evaluates the experimental findings in the context of earlier research. The authors sketch out the channels through which culture interacts with corruption (through institutions and social norms), and argue that discrepancies in experimental results may be due to differences in design (including repetition or unobserved variation in beliefs) or to differences in the response to punishment across societies. In addition to exploring design-based reasons for previous contradictory findings, avenues for future research include: behavioral responses to different types of externalities; replicating results in different countries; and utilizing the lab to formulate effective anti-corruption measures.

Bribery --- Corruption --- Corruption & Anticorruption Law --- Crime and Society --- Cultural Policy --- Culture --- Experiments --- Macroeconomics and Economic Growth --- Public Sector Corruption & Anticorruption Measures --- Social Accountability

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The quest for status is a powerful motivator, but does it affect inequality? This paper presents a novel lab experiment that was designed and conducted to identify the relationship between inequality, status signaling, debt, and conspicuous consumption. It reports three main findings: First, consumption increases when it is "conspicuous" (i.e. is both observable, and signals ability/status). Second, borrowing increases when consumption is conspicuous. More critically, this increase in loan-taking is driven by those at the bottom of the income distribution. Third, in the presence of conspicuous consumption, access to finance exacerbates inequality. The results point to a vicious cycle of inequality and costly borrowing.

Access to Finance --- Conspicuous Consumption --- Consumption --- Finance and Financial Sector Development --- Household Debt --- Inequality --- Living Standards --- Macroeconomics and Economic Growth --- Poverty Reduction --- Psychology --- Socioeconomic Status --- Veblen Goods

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This paper examines the effects of pecuniary compensation on the ability and motivation of individuals in organizations with non-pecuniary or pro-social missions. In particular, the paper compares flat pay systems, unrelated with ability or effort, to two other systems that are considered superior: high-powered, pay for performance schemes and more traditional, "Weberian" schemes that calibrate pay to ability, independent of effort. The analysis uses a sample of future public sector workers and finds that all three pay schemes attract motivated workers into tasks with a pro-social mission. However, flat pay schemes also attract low ability workers. In the short run, pay-for-performance schemes generate higher effort than flat pay and pay-for-ability systems, a difference driven entirely by effects on unmotivated workers. Once selection effects are accounted for, however, workers with pay for ability and pay for performance exert statistically indistinguishable levels of effort in the pro-social task. Moreover, pay for ability elicits effort at lower cost than pay for performance.

Civil Service --- E-Business --- Education --- Education & Society --- Educational Sciences --- Extrinsic Motivation --- Industry --- Intrinsic Motivation --- Labor Policies --- Performance --- Private Sector Development --- Public Sector Reform --- Social Protections and Labor --- Technology Industry

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A booming literature has argued that mission-based motives are a central feature of mission-oriented labor markets. This paper shifts the focus to task-based motivation and finds that it yields significantly more effort than mission-based motivation. Moreover, in the presence of significant task motivation, mission motivation has no additional effect on effort. The evidence emerges from experiments with nearly 250 medical and nursing students in Burkina Faso. The students exert effort in three tasks, from boring to interesting. In addition, for half of the students, mission motivation is present: their effort on the task generates benefits for a charity. Two strong results emerge. First, task motivation has an economically important effect on effort, more than doubling effort. Second, mission motivation increases effort, but only for mundane tasks and not when the task is interesting. Moreover, even for mundane tasks, the effects of mission motivation appear to be less than those of task motivation.

Civil Service --- Extrinsic Motivation --- Intrinsic Motivation --- Labor Policies --- Performance --- Public Sector Development --- Public Sector Reform --- Social Protections and Labor

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Faith-based mutual funds have recently become a growing corner of the mutual fund industry. Morality and ethics are thought to exert an influence on investors' decisions in this segment, although their role in driving such investments is not clear as these funds are also attractive due to their distinct risk-return profile. If nonpecuniary motives are predominant, investors in such funds may be less sensitive to financial performance, resulting in different patterns of fund flows relative to conventional funds. This paper fills the gap in the literature, by providing an express linkage between religious preferences and investment in an Islamic fund. Using an incentivized lab experiment, the analysis compares the extent to which investors with religious preferences are likely to accept inferior financial performance to pursue investments aligned with their religious preferences. The findings show that investment in an Islamic fund is driven by religious preferences and religiosity is strongly tied to investor loyalty in the Islamic fund, with investors more willing to accept reductions in returns and increases in risk. The analysis fails to find that social preferences play a similar role in socially responsible funds. When pitted directly against each other, investors prefer religious investments over socially responsible investments, suggesting that they do not view the two as substitutes.

Mutual funds.