Abstract: Favorable comparison is a common cognitive process of individuals in making unethical decisions. It reduces their sense of moral condemnation from the unethical behaviors performed by themselves by comparing with worse behaviors. Then, is there any information source that may induce individuals to make favorable comparison in reality? In theory, the fraud cases involving large amounts and with very bad social impacts that disclosed in the regulatory punishment announcements may become such potential information sources. By simulating the actual annual performance report scenario, this paper studies the impact of the information of severe casesrevealed in the punishment announcements on the fraud behaviors of small-amount fraud decision-makers by designing a laboratory to experiment and investigate the fraud decision-makings. The experimental results support the hypothesis of favorable comparative effect, that is, compared with the subjects who are not induced by the information of severe cases, the subjects who are induced by the information of severe cases have a higher degree of performance misstatement in the experimental decision-making, and this effect mainly exists in the subjects with a higher degree of risk preference. In addition, the subjects who are induced by the information of serious cases show a much lower level of negative emotion after performing fraudulent behaviors.

Key words: punishment announcement, serious case information, favorable comparison, fraudulent decision-making, negative emotions