Behavioral ethics is a new field drawing on behavioral psych...

Behavioral ethics is a new field drawing on behavioral psychology, cognitive science and relatedfields to determine why people make the ethical decisions, both good and bad, that they do. Muchbehavioral ethics research addresses the question of why good people do bad things.Behavioral ethics may be the next big thing” in ethics education. N.Y.U. recently asked Prof.Jonathan Haidt, whose research is a major part of the new learning in behavioral ethics, to create abehavioral ethics course there. And John Walsh, who helped create the Office of ComplianceInspections and Examinations at the SEC, recently wrote in Corporate Counsel that the “ultimatepromise of behavioralethics…is that it provides pragmatic tools that have been demonstrated towork.2. Task: Watch the following videos:https://www.youtube.com/watch?v=GKaCqd6UDG43. Activity:Based on the videos that you watch above, answer the following questions1. When asked the vast majority of people will agree with the following two statements. Would youagree with them also?a. I have solid, well-considered ethical beliefs that can be altered only by reasoned arguments ornew evidence.b. I have character and integrity that will carry me though when I face difficult moral choices.2. Probably the strongest finding from the last decade research in behavioral ethics is that peoplesimultaneously think of themselves as good people yet frequently lie and cheat (typically in a minorway). Is this consistent with your experience? Do you agree or disagree with the followingstatements from researchers in the field?The empirical evidence seems to point to the conclusion that we lie and cheat much more often thanwe care to admit. At the same time, we strive to maintain a positive image of ourselves, and moralvalues are a central component of our self-image (Francesa Gino)Essentially, we cheat up to the level that allows us to retain our self-image as reasonably honestindividuals (Dan Ariely)Evolution prepared us humans to be devious, self-serving, and only half-honest, inclined to grab thelion share of goodies without being thrown out of the group. Homo sapiens became wired fortruthfulness only to the extent that it suited us, pleased others, and preserved our reputations. Weare willing to break rules to benefit ourselves, but only within limits we can justify. We are good andfair, most of the time—at least in our own minds—but that doesnt exactly make us straightshooters. Our internal cop stops us only when we contemplated big transgressions (Mark Matousek)3. Most empirical research indicates that religiosity is not a significant factor in ethical behavior.Atheists and religious people tend to say that the same actions are ethical and unethical. And whilereligious people tend to give more money and time to their churches and synagogues, religious andnonreligious people otherwise have similar profiles in terms of altruism and volunteerism. Does thissurprise you?4. Have you known good people to do bad things? Either personally, or you've heard or read aboutepisodes in the media?6. If so, how would you explain their conduct?Activity 2 – Bounded Ethicality1. Introduction:Economists have often modelled human decision makers as completely rational. According to thismodel, rational people know their own preferences, gather and accurately process all relevantinformation, and then make rational choices that advance their own interests. However, HerbertSimon won a Nobel Prize in economics by pointing out that people are rational, but only boundedlyso in that they seldom gather all available information, they often do not accurately process theinformation that they do gather, nor do they necessarily know what it is that will make them happy.People are rational, but boundedly so.If the last fifty years of psychological research has proven anything, it’s that the situational oftendominates the dispositional. That is to say, our disposition or desire to be good people can beoverwhelmed by psychological or organizational factors that we may not even be aware of. Thesefactors adversely affect ethical decision making as well as economic decision making, meaning thatpeople are boundedly ethical as well as boundedly rational.The basic notion, as spelled out by Professor Ann Tenbrunsel and her colleagues, is that systematicand predictable organizational pressures and psychological processes cause people to engage inethically questionable behaviors that are inconsistent with their own preferences. Various factorscause us to make unethical decisions that we later regret.For example, although most of us want to act ethically, we also wish to please authority figures.Therefore, if our boss asks us to do something unethical, we may do it without even realizing ourmistake because we are focusing on pleasing the boss rather than on the ethical dimensions of theissue facing us.To take another example we also have a natural desire to be "part of the team" at work. Therefore,if a questionable action advances the team’s interests, as we perceive them, we may act unethicallybecause, again, we are focusing upon achieving the team’s goals rather than adhering to our ownethical standards.Most of us want to act ethically, and are certain that we will because we just know we’re goodpeople. But most of us are also overconfident regarding our own ethicality. This can lead tocomplacency that causes us to make decisions containing ethical dimensions without reflectingdeeply.We’re ethical, it’s true, but bounded so. I recommend a little humility. Only if we truly commitourselves to being ethical people and diligently guard against the organizational pressures andpsychological factors that put bounds upon our ability to be so, can we possibly realize our ethicalpotential.2. Task: Watch the following videos:https://www.youtube.com/watch?v=yDXLzz2144g3. ActivityBased on the videos that you watch above, answer the following questions•Do you think that acting ethically is just a matter of wanting to badly enough? Why or why not?•What kinds of situational factors can you think of that might make it difficult for a well-intentionedperson to always do the right thing?•Can you think of a time when you did not live up to your own ethical standards? What caused youto depart from your own standards?•Can you think of an example of a friend who acted unethically? Or someone in the news lately?Without making excuses for them, can you explain why they might have made bad ethical decisionseven though they are generally good people?•Do you think it’s possible to be completely rational when making ethical decisions? Why or whynot?Activity 3 – Conflict of Interest1. IntroductionWritten and Narrated by Associate Professor Lamar PierceIncentives are pervasive in every aspect of society. People are rewarded for taking certain actions,and not rewarded for taking others. Workers are paid for their effort and productivity, salespeopleare paid for their sales, and small business owners are rewarded with profits for successful ventures.So long as these incentives are well-understood by everyone, they work reasonably well. Theymotivate effort, performance, and social welfare. But sometimes, individuals have incentives thatconflict with their professional responsibilities, often in ways that are not transparent to the publicor in their own minds. These conflicts of interest produce serious economic and social problems.Conflicts of interest are pervasive in markets and in society, and can motivate professionals to act inways that violate their responsibilities and hurt their client and employers. Doctors, for example,may face a conflict of interest when they are paid more for some procedures than for others. Theirprofessional responsibility is to do what is best for a patient, but their financial incentive is notalways aligned with this responsibility. If an oncologist profits from selling chemotherapy agents totheir patients, and some agents are more expensive than others, this conflict becomes a problem.Most doctors would never think of profiting in ways that hurt their patients, but some may eitherconsciously or subconsciously.When there are conflicts of interest, you can almost guarantee that they will at least sometimes leadto bad outcomes. Surprisingly, in many states, real estate agents can represent both the buyer andthe seller in a home transaction. The conflict in such transactions is clear. The agent could neverhave both parties’ best interests in mind, just as an attorney could never adequately represent botha plaintiff and defendant in civil lawsuit. Even professors face a conflict of interest when they’redesigning courses that will be evaluated by students seeking high grades and low workload. If theprofessor is ultimately promoted based on their popularity with students, will they consider makingthe course a little bit easier?The key implication is that managers and policy-makers must constantly evaluate whetherprofessionals and employees might face incentives to act counter to their responsibility. Eliminatingconflicts of interest is one of the simplest and most effective ways to reduce unethical behavior. Butin order to do so, we must be willing to acknowledge that professional codes of conduct, like thosefollowed by doctors, lawyers, accountants, and real estate agents, do not make people immune tothese conflicts, and that these codes are rarely a justification for ignoring the likely outcomes thatconflicts of interest create.2. Task– Watch the following videos:https://www.youtube.com/watch?v=xnRpMQvW_ow3. ActivityBased on the videos that you watch above, answer the following questions•What conflicts of interest have you personally experienced in personal or professional roles?•If you perceive a potential conflict for yourself, what are some ways you might ensure that thisconflict doesn’t lead to unethical behavior for you and others?•When have others’ conflicts of interest impacted how you or those you know were treated?•What types of policies can or do organizations implement to try to reduce conflicts of interest ortheir costs?Activity 4 – Confirmity Bias1. IntroductionWritten and Narrated by Professor Robert PrenticeParents seldom accept as an excuse their child’s plea of "Hey everyone else is doing it." However,psychological studies demonstrate that those same parents, and everyone else, tend to take theircues for proper behavior in most social contexts from the actions of others. This pressure is calledthe conformity bias.Psychologist Solomon Asch found that when he asked subjects to tell which of three lines is thesame length as a fourth line, no one had difficulty unless they were placed in group with Asch’sconfederates who gave obviously wrong answers. Under those conditions, almost all the subjectsfound it very painful to give the obviously correct answer in contradiction to the strangers’ wronganswers. In fact, most participants gave an obviously incorrect answer at least once during the study.This bias to conform is much greater, of course, when the others in the group are co-employeesand/or friends, or when the correct answer is not right there in black and white – as it was in theAsch Study – but is instead a subjective—like an ethical questions.An employee at the accounting firm KPMG challenged the ethics of tax shelters that the firm wasselling. He received a simple e-mail that said: "You’re either on the team or off the team."Well everyone wants to be on the team. We all realize that loyalty is generally an important virtue.But it causes a pressure to conform and this pressure to conform, it can been argued, helped causeFord employees to sell the Pinto despite awareness of its gas tank dangers, and helped A. H. Robinsemployees to continue to sell the Dalkon Shield contraceptive IUD despite knowing its ghastlymedical consequences.The impairment of individual decision making known as "groupthink" – where people deciding ingroups often make more extreme decisions than any individual member initially supports – canexacerbate the conformity bias. It can be reasonably argued that loyalty and groupthink helpedMorton Thiokol employees to remain silent about known O-ring dangers that caused the Challengerspace shuttled disaster.Psychological and organizational pressures can cause even people with good intentions to lie orotherwise act unethically. Good character isn’t always sufficient. As Albus Dumbledore told HarryPotter, "It takes a great deal of bravery to stand up to our enemies, but just as much to stand up toour friends."2. Task – Watch the following videos:https://www.youtube.com/watch?v=Gswmcc4TpxU3. Activity:Based on the videos that you watch above, answer the following questions•Can you think of a time when you did something just because everyone else was doing it—evenwhen it didn’t feel quite right to you? Do you regret it now?•It was recently observed that "cheating is contagious." Does that sound true to you? Why or whynot? If it is true, why might this be the case?•Loyalty is generally considered a good quality. When a group to which you owe loyalty seems to bemaking a decision that seems unethical to you, how should you go about trying to balance yourloyalty to the group against your own ethical integrity? Have you had an experience like that? If so,how did you resolve it?•Can you explain how "groupthink" works? Can you think of a time when you have been subject togroupthink?.Activity 5 – Ethical Fading1. IntroductionWritten and Narrated by Professor Robert PrenticeIn the book he wrote about his crimes, disgraced lobbyist Jack Abramoff—Casino Jack—asked:"What was I thinking?" This is a familiar refrain among white collar criminals. Why can they see theirethical failings in retrospect, but not earlier when it really mattered?Part of the explanation is what professors Ann Tenbrunsel and David Messick call ethical fading.Imagine that you work for a company in internal audit and your boss asks you to inappropriatelymassage some earnings numbers. And it happens to be the week that the company is decidingwhom to lay off in the most recent round of cutbacks. And you want to keep your job, of course. It ispossible that you will not even notice the ethical dimensions of the action you have just been askedto take by your boss. These ethical dimensions may just fade from view.Ethical decisions are often made almost automatically by the parts of our brain that processemotions. Only later do our cognitive processes kick in. When we think we are reasoning to anethical conclusion, often all we are really doing is searching for rationalizations to support thedecision that we have already made instinctively.As time distances us from the decision we have made, the ethical issues may start to reappear. Wemay feel the need to reduce the dissonance that results from the conflict of our view of ourselves asethical people and the unethical action we have committed. Studies show that offering people anopportunity to wash their hands after behaving immorally are often enough to restore their self-image. There’s a reason we talk about starting with a "clean" slate.Even if our minds cannot cause an ethical issue to fade from view, a process known as moraldisengagement can mitigate the sting of an unethical decision. Moral disengagement is a process bywhich our brain enables us to turn off our usual ethical standards when we feel the psychologicalneed to do so, just like we’d turn off a TV when a show comes on that makes us uncomfortable.Studies show, for example, that people who want to buy an article of clothing that they know wasmanufactured with child labor will suddenly view child labor as less of a societal problem than theythought before. Moral disengagement allows us to suspend our personal codes of ethics, yetcontinue to view ourselves as ethical people.There is no easy cure for ethical fading and moral disengagement. Our only option is to be vigilant inlooking out for ethical issues and equally circumspect in monitoring our own actions andrationalizations.2. Task – Watch the following Videos:https://www.youtube.com/watch?v=BSHpeg1XLA03. ActivityBased on the videos that you watch above, answer the following questions•Can you explain the concept of ethical fading and perhaps give an example of when it happened toyou?•Can you think of a situation where you were so intent upon pleasing an authority figure, fitting inwith your friends, or achieving a goal that you failed to give an ethical issue your full attention? Didthat situation cause you regret?•Can you think of an example of a friend who might have been the victim of ethical fading? Or aperson in the news recently?.Activity 6 – Framing1. IntroductionWritten and Narrated by Professor Robert PrenticeIn any kind of decision-making, context counts. The simple reframing of a situation or question canproduce a totally different answer from the same person. For example, people would rather buy ahamburger made of meat labeled 75% fat free than meat labeled 25% fat. In fact, when questioned,these people will tell you that the 75% fat-free burger tastes better than the 25% fat burger, eventhough the burgers are identical.When NASA was deciding whether to launch the ill-fated space shuttle Challenger, Morton Thiokol’sengineers at first opposed the launch on safety grounds. But when their general manager instructedthe engineers to "put on their management hats," he reframed the decision from one focusing onsafety to one focusing on dollars and cents. The engineers then unfortunately changed theirdecision.We need to look beyond the obvious frame of reference in business – "will this be a profitabledecision?" – and consider our actions from a broader perspective like "how will this look when it’sreported on the front page of the newspaper?"Decisions made by business people often occur in a context where subjective factors predominate,and the framing of an issue is particularly influential. In Enron’s declining days, the companyattempted to save money by encouraging employees to minimize travel expenses. An Enronemployee later wrote that he intentionally flouted the new policy. While this seems like a clearethical lapse, in the employee’s mind, he deserved to stay in the most expensive hotels and to eat atthe best restaurants because of how very hard he was working. He framed the issue in terms of hisnarrow self-serving interests, not in the broader ethical context of adhering to company policy.CFOs and accounting personnel at Enron, HealthSouth, and other scandal-ridden companies didn’tneed a philosophy course to help them figure out that their manipulation of financial statementswas unethical. Their problem was that at the time of their actions, their frame of reference wasloyalty to the company and to the company’s goal of maximizing stock price. Had those employeesbeen able to think in terms of the bigger ethical picture – for example, the impact of their actions onother people’s pension funds – they might have acted differently.2. Task – Watch the following Videohttp://ethicsunwrapped.utexas.edu/video/framing3. Activities:•Studies show that people primed to think about business profits will make different choices thanpeople facing the same decision who have been primed to think about acting ethically. Can youexplain how that might affect you in your work life•Can you think of a situation where you made a decision that you regret and probably would havechosen differently had you looked at the choice in a different way?•How do politicians and advertisers use framing to channel people’s decision?•How might framing adversely affect your ethical decision making in your projected workplace?•How can you work to ensure that ethical considerations stay in your frame of reference when youmake decisions in your career and your life?.Activity 8 – Fundamental Moral Unit1. IntroductionWritten and Narrated by Professor Deni ElliottThere are so many considerations in making ethical decisions, but what consideration is mostimportant? Different cultures and ethical systems have produced theories that favor oneconsideration over others. The consideration that a theory favors is called a Fundamental MoralUnit, or FMU.Many of the classical Western philosophers from the Greek and roman traditions favor the individualas the Fundamental Moral Unit. In these theories, the primary dictate is a negative statement: Don’tget in an individual’s way in his or her pursuit of the good life.Feminist theories tend to determine the best choice based on how well those choices strengthen theconnections among people and how well the needs of the most vulnerable are addressed. Thefundamental moral unit here is relationship between people and is based on the belief that careshould be given to those who can’t take care of themselves.Some Eastern theories promote the overall good of the community first and foremost. And someindigenous theories stress human’s connection with the world as a whole, with all natural systemsand species having an equal right to co-exist. People who grow up in these traditions expect thatthey and others will sacrifice individual self-interest for the good of the group and the environment.The Fundamental Moral Unit here is called "aggregate good."Let’s consider a decision you might encounter if you were a member of your local city council. Thereis a 50 acre parcel of land in your city’s jurisdiction that was designated a hundred years ago toremain open space. Now the area contains some ancient Native burial grounds, but the tribemembers a hundred years and tribe members today are happy with the designated use as long asthe woodlands around the burial mounds stay intact. A developer would like to build a shopping mallthere. As a city council member, you get to decide how that land will be used today: should it remaina park or become a shopping mall?If you make your choice based only on the good that comes to individuals, you might be tempted togo with the shopping mall. The mall will provide jobs for many of the people in the community whoare out of work and the additional income from the taxes from the new property owner and thebusinesses will allow the city to reduce taxes for individual home owners.Which choice best advances the overall good of the community in which I live? The policy choicemade previously to protect the land respected human connections to natural systems and wassensitive to the culture and history of a minority group. Affirming that decision helps all people inthe community maintain trust in government.We can see how the teachings from all of these traditions can help us in analyzing an importantchoice. And they can help us answer one more question: Can I find a choice that doesn’t cause harmto anyone or anything? If a shopping mall is a good idea for the community, alternative building sitesthat don’t cause harm are waiting to be found.2. Task – Watch the following videos:https://www.youtube.com/watch?v=7-OBYIyh-NU3. Activity:Western philosophy identifies the individual as the FMU; feminist theories tend to use relationshipand maintaining the connections among people; Eastern and indigenous theories put natural orspiritual systems as the core to be maintained.1. Give an example to show that you can use these different kinds of thinking to arrive at the sameor similar answers for what is morally permitted. Show how, in some instances, the answer to whatis morally permitted would be different.Activity 9 – Incentive Gaming1. IntroductionWritten and Narrated by Associate Professor Lamar PierceOrganizations and institutions frequently use financial incentives to motivate productive behavior.The majority of people dislike effort to some degree, which forces authorities to either monitorpeople intensely to ensure that they contribute, or to pay them based on their observableperformance. Salespeople are given commissions, bankers are given bonuses, and even teachers arepaid for student performance.The problem with these incentives, of course, is that you need to decide on which metrics to basethe incentives, and then communicate those rules to people in order to motivate their performance.You can only pay people based on what you observe, and you can’t observe everything. Which iswhy we get incentive gaming.Incentive gaming is when people manipulate pay-for-performance schemes in ways that increasetheir compensation without benefiting the party that pays. Often referred to as "rewarding A whilehoping for B", incentive gaming is an example of how opportunistic and strategic people can bewhen there are financial rewards involved. People will focus all their effort on those incentives thatpay them the best, and will even manipulate information to represent their performance on thosedimensions as higher than it actually is.The financial crisis of 2008 provided several excellent examples of incentive gaming. Some mortgagebrokers, who were paid commissions for originating mortgages, quickly learned they could earnmore money if they relaxed the credit requirements for homebuyers. They were compensated basedon originating a loan, not on whether that loan defaulted in subsequent years, a costly outcome forthe bank and homeowner. The incentives designed to motivate effort and entrepreneurial behavioralso motivate people to increase their earnings in ways that hurt both their customers and marketefficiency.Examples of incentive gaming are everywhere. When teachers are paid based on the standardizedtest performance of their students, they focus much of their effort on teaching to the test and hurtstudent education. When salespeople are given bonuses for reaching monthly sales targets, theyoffer customers unnecessary discounts to buy now rather than later. When workers are paid basedon their relative rankings, they may focus their effort on sabotaging their coworker instead ofimproving their own performance.The implication of incentive gaming is that managers and policy-makers need to understand thathumans are clever and opportunistic beings. If you give them an incentive system, many of them willfigure out how to manipulate it to maximize pay and minimize effort. Designers of incentive-basedcompensation systems must think carefully about unintended consequences, putting themselves inthe shoes of their employees, and ask, "If I were given these incentives, what might I do to gamethem?"2. Task – Watch the following video:https://www.youtube.com/watch?v=Rt2PnDh_WzI3. Activity:1. When have you been paid based on your performance, and how did this alter the way youapproached your job (for the better and for the worse)?2. Grades are partly intended to provide incentives for quality work. How do students strategicallygame grading systems in ways that might pervert this intent?3. Is gaming unethical, or is it just rationally responding to the incentive system? Whoseresponsibility is it to stop gaming: the person who designs the incentive system, or the person whoexploits it?4. How do you draw the line between gaming and cheating?.Activity 10 – Instrumentalism.1. Task – Watch the following video:https://www.youtube.com/watch?v=WU6J5E9Vzz82. Activity:1. Psychologist Dan Ariely says that "the first dishonest act is the most important one to prevent."Why does he say that? Do you agree?2. Can you think of a situation where you were a victim of the slippery slope phenomenon?3. Have you seen a friend or read about someone in the newspaper who started cutting little cornersand was soon in big trouble?4. Cynthia Cooper, whistleblower of the infamous WorldCom financial fraud, wrote: "People don’twake up and say, ‘I think I’ll become a criminal today.’ Instead, it’s often a slippery slope and we loseour footing one step at a time." Do you agree? Why or why not?5. What can people do to prevent a mistake from snowballing down the slippery slope?Activity 11 – Loss Aversion1. Introduction:The objective of this video is to introduce students to the concept of loss aversion so that they canrealize how it is one of a series of psychological forces that can cause them to act unethically, almostwithout realizing it. It is a phenomenon that must be guarded against.People can relate to the notion that loss aversion has an impact on tax cheating. People will cheatmore to avoid a loss than to secure a gain. So, if they have over-withheld, they are less likely to cheatin order to obtain a larger tax refund (which they view as a gain) than they are to cheat if they haveunder-withheld and are trying to avoid making a tax payment (which they view as a loss).The two key things about loss aversion are that people hate losses more than they enjoy gains andthat they will take risks (including unethical actions) to avoid losses that they would not take tosecure gains. Students can usually grasp this idea and relate to it in their everyday lives. A student ismore likely to cheat to avoid flunking out of school (a loss) than to move from a B to an A (a gain),unless she has a 4.0 GPA and views the potential B as a loss. In one experiment, subjects were morelikely to be in favor of gathering "insider information" and more likely to lie in a negotiation if facinga loss rather than a potential gain. In real life, loss aversion means that people who have mademistakes and perhaps even violated the law through carelessness or inattention often will, uponrealizing that fact, take their first consciously wrongful step in order to attempt to ensure that themistake is not discovered and they do not lose their job or their reputation. They will lie, they willshred, and they will obstruct justice. Martha Stewart was not convicted of insider trading, but ofobstructing justice to prevent financial, reputational, and other losses that would come from aninsider trading conviction. Frank Quattrone, Wall Street’s most influential investment banker duringthe dot.com boom, was not convicted of securities fraud but of inducing subordinates to destroy e-mails that would have created the loss that follows such a conviction.Loss aversion also means that firms that are performing well, but not as well as they expected to oras other expected them to, may engage in unethical behavior because they frame their act ofprofiting (but not profiting as much as expected) as a loss rather than a gain.2. Task – Watch the following video:https://www.youtube.com/watch?v=0FbwPcsQl1A3. Activity:1. Studies show that people hate losses twice as much as they enjoy gains? Is that consistent withyour experience?2. Have you ever been caught off guard doing something you probably shouldn’t have been doing(eating the last cookie in the cookie jar, peeking in someone’s diary, touching your mother’s jewelry)and when surprised with the question: "What are you doing?", quickly and almost automatically(and falsely) said: "Nothing!"3. A recent study found that when people were under time pressure, they were more willing tocheat to avoid losses ("losing the sale") than to accrue gains ("getting the sale"). Do you think that ishow you would react?4. Can you think of any situations where you or someone you know may have made decisionsaffected by loss aversion?5. What steps can people take to minimize the chance that loss aversion will help lead them to actunethically?Activity 12 – Moral Agent & Moral Subject1. Introduction:Written and Narrated by Professor Deni ElliottMore than 2000 years ago Aristotle and other wealthy Athenian men decided how people likethemselves should treat one another. Everyone should be free to pursue their own idea of the goodlife as long as that person’s choice did not interfere with somebody else’s pursuit of the good life.That idea