Cheating and Loss Aversion: Do People Cheat More to Avoid a Loss?

Does the extent of cheating depend on a proper reference point? We use a real-effort matrix task that implements a two (gain versus loss frame) times two (monitored performance versus unmonitored performance) between-subjects design with 600 experimental participants to examine whether the extent of cheating is reference dependent. Self-reported performance in the unmonitored condition is significantly higher than actual performance in the monitored condition - a clear indication of cheating. However, the level of cheating is by far higher in the loss frame than in the gain frame under no monitoring. The fear of a loss seems to lead to more dishonest behavior than the lure of a gain.