Perilous and unaccountable: the positive relationship between dominance and moral hazard behaviors

Journal of Personality and Social Psychology

Organisational Behaviour

Journal of Personality and Social Psychology 2024 Online first

Brady G L;Kakkar H;Sivanathan N

Niro Sivanathan

2024

Moral hazard involves a context where decision-makers engage in behaviors that prioritize selfinterest while allowing the associated risk to be primarily borne by others. Such decision-making can lead to catastrophic consequences, as seen in the 2008 global financial crisis after hedge fund managers indiscriminately invested their clients’ money in subprime mortgages. This research examines which decision-makers are most likely to engage in moral hazard decision-making and the psychological mechanism driving this behavior. Drawing on the dual model of social influence, we posit that individuals associated with dominance, but not prestige, will engage in greater moral hazard behaviors. We further contend that these behaviors are driven by dominant decision-makers’ enhanced focus on end goals (outcomes) rather than the means (process) that they use to pursue such goals. We find support for our hypotheses across 13 studies (NObservations = 26,880; of which eight were pre-registered and six studies are reported in the Supplementary Information (SI)), using both correlational and experimental designs. Additionally, we vary the moral hazard context (e.g., a financial setting, a health and safety issue, etc.) and capture both behavioral intentions and actual behaviors, while also ruling out several alternative explanations. These findings demonstrate that dominant decision-makers engage in moral hazard behaviors because of their tendency to prioritize outcomes over processes.

Dominance and prestige; Moral hazard; Goal pursuit; Outcome accountability; Process accountability

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