Study: How Rejection Could Lead to Fraud

A new study revealed that the pain an individual feel when being rejected could lead the person to commit fraud.

The study, published in the journal Frontiers in Psychology, suggests that people who are rejected by their insurance companies, regardless of the fairness of the rejection, were more likely to submit false insurance claims in their next try.

For the study, the researchers recruited 156 American MTurks workers. The participants were told that the study is about English language proficiency. To make the cover story of an English language proficiency test more plausible, the researchers divided the test into two parts: grammar and semantics.

The grammar test consisted of ten questions. The participants were told that if they answered all ten questions correctly they would receive a bonus amount of money if they answer all questions correctly. Participants who were unable to answer all ten questions correctly were given a feedback. On the other hand, participants who have a perfect score in the grammar test were divided into two groups. The first group was provided with false feedback that they would not receive the bonus (rejected group), while the second half did not receive such feedback and were told that they would receive the bonus (accepted group).

On the Semantic test, the participants were asked to define three words. Two of those words were familiar by all of the participants while the other word was unknown to all. Once again, the researchers told the participants that they would receive a bonus when they correctly defined all three words.

The researchers observed that 21 out of the 81 participants in the rejected group behaved unethically on the semantic tests, while only 14 out of 75 participants in the accepted group cheated. Cheating is defined as providing the correct definition of the word "Kench" by looking up the correct answer. Quitting during the test is also identified as behaving unethically. Out of the 21 who behave unethically in the rejected group, 13 were quitters.

With their findings, the researchers recommend insurance companies to provide clarity and transparency to all their clients and make their guidelines and rejection policy clear.

"Fraud is a widespread issue that is costing society and thereby each individual large sums of money. The problem with fraud is that it benefits a few people, but as a result harms the rest of a population," explained Dr Sophie Van Der Zee, lead author of the study, in a statement. "If we understand when people tend to behave dishonestly and commit fraud, we can construct the environment in a way that people are encouraged to behave honestly rather than deceptively."