Exploiting one’s power with a guilty conscience: An experimental investigation of self-serving biases Philipp E. Otto ⇑ , Friedel Bolle European University Viadrina, Germany article info Article history: Received 7 May 2014 Received in revised form 8 July 2015 Accepted 7 August 2015 Available online 17 August 2015 JEL classification: D03 D23 H41 PsycINFO classification: 2360 2910 3000 Keywords: Moral behavior Power Self-serving bias Public good games abstract In our experimental investigation powerful managers use their discretion power to their own advantage and admit that their behavior is unfair. This contradicts studies stressing self-serving biases. Self-serving biases are often identified by asking people what fairness standards apply in situations with alternative income distributions. Nevertheless, when the response to a question is connected with a distributional decision, only the reply, but not necessarily the fairness standard, is biased. Social preference models envisage decisions as a compromise between self-interest and social concerns (norms). A model-based estimation of social concerns, as provided by this paper, is capable of identifying different sorts of self-serving biases. Higher income triggers higher fairness scores, but there are no indications that a relatively higher income compared to the peers is generally perceived as fairer than a relatively lower income. Ó 2015 Elsevier B.V. All rights reserved. 1. Introduction Imagine a situation with powerful ‘‘managers” and powerless ‘‘workers”. Will managers use their power to their own advantage? In our experimental investigation, 40% did. Not surprising is the fact that the majority of workers presume this behavior to be unfair. More interesting is how managers evaluate their own behavior. Surprisingly, the majority admit that their behavior is unfair. These are results from a general model-based investigation of self-serving biases. The research question is whether or not absolute and relative self-serving biases exist. An absolute income bias exists, if fairness evaluations increase with one’s own income. If inequality to one’s advantage is assumed to be less unfair than inequality to one’s disadvantage, there is a relative income bias. If fairness evaluations of managers differ from those of workers, then there is a role bias. http://dx.doi.org/10.1016/j.joep.2015.08.005 0167-4870/Ó 2015 Elsevier B.V. All rights reserved. ⇑ Corresponding author at: Microeconomics Department, Große Scharrnstraße 59, 15230 Frankfurt (Oder), Germany. Tel.: +49 (0)335 5534 2289. E-mail address: otto@europa-uni.de (P.E. Otto). Journal of Economic Psychology 51 (2015) 79–89 Contents lists available at ScienceDirect Journal of Economic Psychology journal homepage: www.elsevier.com/locate/joep