Counteracting dishonesty strategies: A field experiment in life insurance underwriting

Abstract

Individuals often face financial incentives that challenge their desire to behave honestly. Strategically making excuses to justify dishonesty allows them to give in to the temptation of financial benefit and retain their moral self-image. In the context of insurance underwriting, the stakes are high, as providing false information or redacting information allows customers to reduce premiums. This is particularly true for smoking disclosures that carry great weight in life insurance. We conduct a field study with a large insurance company with the aim of neutralizing justification strategies that individuals deploy for reducing the costs of dishonest smoking disclosures to insurers. First, we raise awareness of the negative consequences dishonesty could have on other policy holders to counteract that individuals could attenuate or ignore such adverse consequences. Second, we make salient the pro-social efforts of the insurer to work against a potentially negative perception of the insurance industry that may feed the excuse of insurance companies being deserving of harm. The study presents field evidence that messages containing information about the social consequences of one's actions or the pro-social behavior of a second party can influence normative behavior, particularly honesty.