Study: Managers Overestimate Employee Dishonesty, Driving Excessive Workplace Surveillance

The modern workplace has seen a rapid expansion of digital surveillance. From keystroke loggers to screen-capture software, organizations increasingly rely on technology to monitor their remote and hybrid workforces. The underlying justification for this digital oversight is often a simple assumption: without strict monitoring, employees will inevitably cut corners, slack off, or act dishonestly.[1][2]

But what if that foundational assumption is mathematically incorrect? A comprehensive new psychological study suggests that the corporate impulse to surveil is driven more by a pervasive cognitive bias than by actual human behavior. According to the research, people consistently and dramatically overestimate how dishonest others truly are.

The findings, published in the Journal of Experimental Social Psychology, draw on a massive dataset of 11 experiments involving more than 8,000 participants. The research team, led by Jareef Martuza at the Norwegian School of Economics, set out to measure the exact gap between how much we think people cheat and how much they actually do.[3]

To test this, participants were placed in scenarios where they could anonymously lie for a small financial reward. Crucially, there was no risk of punishment or reputational damage if they chose to be dishonest. Participants were then asked to estimate what percentage of their peers would take the bait and cheat in the exact same scenario.[2][3]

The results revealed a stark disconnect between perception and reality. On average, participants overestimated the dishonest behavior of others by nearly 14 percentage points. Nearly two-thirds of the respondents assumed that their peers would cheat far more often than the data showed they actually did.[2]

In reality, human beings proved to be remarkably decent. Around 70 percent of participants behaved entirely honestly, even when dishonesty was financially beneficial and completely untraceable. While a minority of roughly 30 percent did cheat when given the opportunity, the vast majority of people assumed that the baseline rate of deception was much higher.[1][2]

"People on average overestimated what percentage others behave dishonestly by about 14 percentage points, which is a substantial effect," Martuza noted, expressing surprise at how consistent this pessimistic bias remained across various contexts and demographic groups.[1]

This phenomenon, which the researchers term "moral pessimism," extends far beyond abstract academic exercises. In the third phase of their research, the team focused specifically on professional managers to see how this bias translates into the workplace.

They found that managers suffer from the exact same cynical blind spots as the general public. When asked to predict behavior in a simple die-rolling game, managers estimated that 55 percent of people would lie—a prediction that was 25 percentage points higher than the actual cheating rate.

This managerial bias has profound, real-world consequences for corporate policy. The study revealed that managers who harbored the most pessimistic beliefs about human honesty were significantly more likely to endorse freedom-restrictive countermeasures.[3]

Driven by an inflated fear of workplace theft, time theft, and fraud, these managers strongly preferred implementing intense surveillance systems, strict background checks, and rigid monitoring protocols. Their internal pessimism directly fueled a desire to control and track their employees.

The irony is that excessive monitoring often backfires. Workplace culture advocates and behavioral scientists note that when companies monitor an employee's every move, it signals a profound lack of trust. This environment can decimate morale, increase anxiety, and cause employees to disengage from their core responsibilities in favor of performing "performative work" just to satisfy the tracking software.[1]

So, why are our brains wired to assume the worst in our colleagues? Psychologists point to the negativity bias. Instances of fraud, scams, and workplace theft are highly memorable and frequently dominate news headlines. "If it bleeds, it leads" applies to our internal memories as well; we easily recall the one time an employee abused a policy, while the thousands of ordinary, honest interactions fade into the background.[1]

Fortunately, the researchers discovered that this cynicism is not a permanent, unchangeable state of mind. In the final phase of the study, the team tested a simple intervention: they presented the managers with the actual, evidence-based statistics regarding human honesty.

The results were immediate and uplifting. When managers learned that 70 percent of people behave honestly even when no one is watching, their desire to surveil and control their staff dropped significantly. Correcting the misperception causally reduced their support for heavy-handed monitoring systems across multiple hypothetical business scenarios.

Providing accurate data helped calibrate the managers' risk assessments, proving that real trust does not have to be naive—it can be a tactical, smart decision rooted in factual evidence. When leaders baseline their expectations on reality rather than irrational fear, they naturally build healthier, more autonomous work environments.[1]

While some level of security and oversight will always be necessary in business, this research offers a powerful reminder to organizational leaders. The vast majority of employees show up to work with integrity. By recognizing our inherent bias toward suspicion, companies can step back from the brink of excessive surveillance and give their teams the trust they have actually earned.