Cheating Is More Likely If Others Benefit Too
In the movie Arbitrage, hedge fund magnate Robert Miller (Richard Gere) justifies his financial and personal chicanery on the grounds that it benefits others (employees, investors, family). This is in the long tradition of Enron, Martha Stewart, Bernie Madoff and many others and now has some academic backing in the form of a new working [...]

In the movie Arbitrage, hedge fund magnate Robert Miller (Richard Gere) justifies his financial and personal chicanery on the grounds that it benefits others (employees, investors, family).  This is in the long tradition of Enron, Martha Stewart, Bernie Madoff and many others and now has some academic backing in the form of a new working paper from Harvard Business School.

The paper examines whether individuals cheat more when other individuals can benefit from their cheating (they do) and when the number of beneficiaries of wrongdoing is larger (they do). The results indicate that people use moral flexibility in justifying their self- interested actions when such actions benefit others in addition to the self.

. . . our findings suggest that when others can benefit from one’s dishonesty people consider larger dishonesty as morally acceptable and thus can benefit from their cheating and simultaneously feel less guilty about it.

The authors write that their findings “may have serious implications for the study of collaborative work in the social realm. Self-managed or empowered teams are one of the most prevalent groups in modern corporations. In these teams, decision- making authority is delegated to individual members, who are in charge of making decisions with consequences for their peers and their organization.”

“Our findings suggest that the upside of monitoring and empowerment can be overwhelmed by the downsides of the increased moral flexibility induced by the presence of others. Thus, one implication can be that some members of teams should not be a part of the social circle of the group, and another is the recognition that good people who care about their coworkers can in fact end up cheating more.”

Self-Serving Altruism? When Unethical Actions That Benefit Others Do Not Trigger Guilt by Francesca Gino, Shahar Ayal, Dan Ariely

Technorati Tags: corporate-governance, financial-fraud

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