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Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Anastasiia Faikina
Peer Effects and Dishonest Behavior in the Individual Projects
Economics
(Bachelor’s programme)
10
2016
This paper presents a theoretical model of the agent's optimal decision between honest behavior and cheating in the individual projects while being located in peer environment. I construct the model using a classical principal - agent relationship given a possibility of cheating that has not been properly analyzed before. I consider two different settings, cheating as a crime of opportunity and a simultaneous decision about efforts and cheating, which give the same intuitive results. The conclusions of my model suggest that higher able agents, who are more productive in honest efforts and more adherent to social norms, have a significantly lower probability of being engaged in cheating behavior. At the same time, the principal can also reduce the level of cheating through an increase of a size of the punishment or manipulation of risks. The most interesting solution of the problem of cheating is a creation of atmosphere of peer trust since agents always refer to the behavior of others. A possible illustration of the model is a problem of cheating by students whose decisions are very consistent with the implications of the model due to my empirical analysis.

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