Reducing Bounded Ethicality

Ting  Zhang; Pinar O. Fletcher; Francesca  Gino; Max H. Bazerman

Article | Organizational Dynamics | October–December 2015

Reducing Bounded Ethicality: How to Help Individuals Notice and Avoid Unethical Behavior

by Ting Zhang, Pinar O. Fletcher, Francesca Gino and Max H. Bazerman

Abstract

Research on ethics has focused on the factors that help individuals act ethically when they are tempted to cheat. However, we know little about how best to help individuals notice unethical behaviors in others and in themselves. This paper identifies a solution: instilling a mindset of vigilance. In an experiment, individuals playing the role of financial advisers recommended one of four possible investments to their clients. Unbeknown to these advisers, one of the funds under consideration was actually a fraudulent feeder fund of Madoff Investment Securities. Results from this empirical study demonstrate that instilling vigilance by asking individuals to indicate their suspicions prior to making a decision was critical to helping them notice fraudulent behavior and act on that information. In contrast, committing to a decision prior to contemplating suspicions precluded individuals from subsequently integrating critical information about the fund’s fraudulent activity. We extend these findings to other interventions aimed at helping managers notice unethical behavior.

Keywords: Ethics; Management Skills; Behavior; Perception;

Format: Print

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Citation:

Zhang, Ting, Pinar O. Fletcher, Francesca Gino, and Max H. Bazerman. "Reducing Bounded Ethicality: How to Help Individuals Notice and Avoid Unethical Behavior." Special Issue on Bad Behavior. Organizational Dynamics 44, no. 4 (October–December 2015): 310–317.

In six studies, we show that after experiencing a threat to their abilities, individuals who misrepresent their performance as better than it actually is boost their feelings of competence. We situate these findings in the literature on self-protection. We show that this “counterfeit competence” effect holds when threat is measured (Study 1), manipulated (Study 2), and when the opportunity to cheat is randomly assigned (Study 3). We extend our findings to a workplace context, showing that threatened individuals who lie on a job application feel more capable than those who report them honestly (Study 4). Finally, consistent with the argument that counterfeit competence is driven by self-protection, we find individuals do not predict they would experience such a boost (Study 5) and that cheating after threat offers benefits similar to those provided by other established methods of self-protection (Study 6). Together, our findings suggest that, after threat, misrepresenting one’s performance can function as a mechanism that helps to restore positive self-evaluations about one’s capabilities.

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Reducing Bounded Ethicality: How to Help Individuals Notice and Avoid Unethical Behavior

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