Two patterns emerge from the analysis of our benchmark
model, depending upon how susceptible individual
agents are to social influence. When average susceptibility
is low, the number of fraudsters in the organization tends
toward a specific level and remains relatively stable over
time. When average susceptibility is moderate to high we
observe a very different pattern in which the number of
fraudsters in the organization vacillates over time between
extremes; either virtually no one in the organization is a
fraudster or virtually everyone is.
When we consider mechanisms to prevent or eliminate
fraud, we find that their impact is contingent on average
susceptibility to social influence within the organization.
A reduction in perceived opportunity or the introduction
of influential, honest managers (tone at the top) reduces
the number of fraudsters, but neither change to our model
is effective in eliminating outbreaks of fraud when susceptibility
is moderate or high. Allowing honest employees to
be more influential than fraudsters has no qualitative effect
when susceptibility is low; however, it transforms
behavior when average susceptibility is moderate to high,
reducing the number of fraudsters to near zero and eliminating
fraud outbreaks. The contingent nature of this effect
may prove important in fraud risk assessments performed
by auditors. We also find that efforts to remove fraudsters
can effectively reduce the number of fraudsters to near
zero regardless of the level of susceptibility, but such efforts
do not eliminate fraud outbreaks when susceptibility
is moderate to high.
This paper continues with a brief introduction to ABM.
This methodological introduction is followed by the development
of a benchmark model of an organization with no
interventions to prevent fraud. We then modify the benchmark
model to examine the effect of anti-fraud interventions.
This paper ends with our conclusions and a
discussion of the implications of our analysis.