Do situational social norms crowd out intrinsic preferences? : an experiment regarding the choice of honesty

Social norms can act as safeguards against corporate misconduct, but can also foster undesirable behavior. To study differences in individual resistance to social norms, we conduct a laboratory experiment on misrepresentation of earnings. There are systematic differences among individuals' reactions to social norms approving or disapproving of misrepresentation. Specifically, individuals with strong preferences for truthfulness react less to both kinds of social norms. These findings have implications for the empirical and theoretical analysis of managerial behavior and for the use of social norms as steering tools for corporate governance