Multi-step delegation and the frequency of immoral decisions: Theory and experiment

People who can increase their payoff by violating a moral norm may delegate decisions to dilute their perception of responsibility, which can lead to a higher overall frequency of moral transgressions. To structure the different effects at work, we first develop a model with multiple delegation stages where decision makers have private information on their lying costs and dilution of responsibility. Our model shows that the impact of delegation is generally ambiguous, but also identifies intuitive sufficient conditions for more moral transgressions with delegation. We then perform a large-scale online experiment where subjects in groups of three can increase their payoff by lying about the outcome of a lottery. We find no evidence that delegation increases the overall lying frequency. Estimating the subjects’ preferences from the data, we find a normal distribution for lying costs and a strongly negatively skewed distribution for a rather low dilution effect.