Honesty is a complex and tricky thing, and we don’t want to be honest all the time.
I always found the appeal to the market gods a bit odd. Why would the market fix mistakes instead of aggravating them?
While we somehow understand revenge on an intuitive level between individuals, I do suspect that companies, assuming that people are rational, completely miss and underestimate the motivation people have for revenge.
The experiments show quite clearly that, as you resist more and more temptation, you’re actually more and more likely to fail.
In terms of the actual curriculum for management education, my own view is very simple-minded: The world is incredibly complex, it changes all the time, and we should not even hope that we could create a general model that accurately describes the world in all its possible states.
It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches!
Disasters are usually a good time to re-examine what we’ve done so far, what mistakes we’ve made, and what improvements should come next.
What kind of people would be able to rationalize better than other people? Better storytellers, right? Creative people, right? Because if you’re creative, you find more ways to cheat and still yourself a story about why this is okay.
We should teach the students, as well as executives, how to conduct experiments, how to examine data, and how to use these tools to make better decisions.
We talk about honesty, but the reality is we have lots of human values, and they are not all compatible. We don’t always tell the truth about everything, no matter what the consequences.
In a world where everyone is behaving honestly, any dishonesty constitutes a big infraction. But, in a world where many people are behaving dishonestly, and the news is filled with stories of their infractions, even big infractions can feel small to the perpetrator.
Even the most analytical thinkers are predictably irrational; the really smart ones acknowledge and address their irrationalities.
Dishonesty is all about the small acts we can take and then think, ‘No, this not real cheating.’ So if you think that the main mechanism is rationalization, then what you come up with, and that’s what we find, is that we’re basically trying to balance feeling good about ourselves.
It is helpful to think of people as having two fundamental motivations: the desire to see ourselves as honest, good people, and the desire to gain the benefits that come from cheating – on our taxes or on the football field.
Because cheating is easier when we can justify our behavior, people often cheat in small amounts: We can come up with an excuse for stealing Post-It notes, but it is much more difficult to come up with an excuse for taking $10,000 from petty cash.