(Dis)honesty

It’s very hard to differentiate between stupidity and intentional dishonesty. Yesterday, I made a mistake of posting an inaccurate portrayal of statements made by another blogger. I removed it from my blog almost immediately. But subscribers to my blog had received the post, and one reader quickly accused me of “defamation”, and told me that I was “on notice”.

Mistakes are made, I attempt to correct them as quickly and as best I can, but sometimes people just crave confrontation.

I’d like to take the opportunity to talk about true dishonesty. I’m a big fan of Dan Ariely, who studies behavioural economics. When Salty Features wanted to crowdfund a movie about dishonesty, centered around Dan’s work, I did not hesitate to sign up, and I can only recommend that you go watch (Dis)honesty (it’s on Netflix in Denmark and most other places I would imagine).

Dan and his team tries to establish a baseline for how dishonest people are, in general. The experiment is quite simple. They hand out math tasks. The more tasks are solved, them higher the reward (a few dollars). But, instead of handing the papers over for verification, they are to send them straight to a paper shredder. Then proceed to the controller’s desk, and simply state how many tasks were solved. No chance of verification.

The rigid financial theory says that there is 0% chance of being caught, so they might as well say that they solved all the tasks, and reap all the reward.

But that’s not what happens. A lot of people cheat a little bit, some not at all, and some go all in (in accordance with the rigid theory). The completely honest and completely dishonest people are outliers.

How did they know that the students cheated? The shredder was rigged. Some people might have suspected this, but even if they did, there would be no repercussions to go all in on the cheating, so some people are just naturally honest, while some use every opportunity to the fullest.

The experiment was then changed, so that instead of direct payment, the students would receive tokens, that would then be exchanged to real cash. Most people would probably assume that this made no difference at all, but as it turns out, this added abstraction of cheating = cash, increased the cheating substantially. The end result was the same, but one step was interjected that really should have mattered, but it did.

So, what if we look at the business world? Dan argues that the abstraction of money in high finance might be a contributing factor in what he describes as cheating, but it’s not just banks. As Dan’s research shows, a little bit of cheating is common – natural – even.

We can also illustrate the principle in another way:

Here’s an example of something that everyone will agree is problematic:

Company A pays B (who claims “independence”) to write about competitors of Company A.

Anyone in their right mind would say that B is hardly independent, and who would ever trust anything B has to say regarding companies in A’s domain? I know that a few would. There’s always a few. But most wouldn’t.

How about this, then:

Company A pays Company C to sign up to a service from Company D that is owned by B.

The end result is the same, but we’ve inserted a few layers of abstraction between A and B. And as Dan’s research show, there’s always a few that exploit this as far as it can go.

I highly recommend Dan’s books. And may I suggest you visit his sites too.

 

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