Everyone cheats a little from time to
time. But most major betrayals within organizations – from accounting
fraud to doping in sports – start with a first step that crosses the
line, according to Dan Ariely, a leading behavioral economist at Duke
and author of The (Honest) Truth About Dishonesty: How We Lie to Everyone – Especially Ourselves.
That step can start people on a “slippery slope.” In this interview
with Wharton management professor Adam Grant, Ariely helps leaders
understand how to prevent people from taking that first step, how to
create a code of conduct that makes rules and expectations clear and why
good rules are critical to organizations.
Adam Grant: How common is dishonesty in organizations?
Dan Ariely: Very common. But the
thing that is common is not big cheaters. The common thing is little
cheaters…. What we find is that lots of people can cheat a little bit.
If we cheat a lot, we … face the possibility that we will feel bad about
ourselves. So we play a game within ourselves.
Sometimes we think about game theory as
kind of a game between two parties. It is also a game within a person.
You say to yourself, I want to think of myself as a good, honest,
wonderful person. I selfishly want to benefit from dishonesty. It turns
out that you can cheat a little bit and still feel good about yourself.
That is the general lesson that we find.
We have run experiments on cheating
[with] close to 50,000 people so far. We found a handful of big
cheaters, and we lost a few hundred dollars to big cheaters. We found
more than 30,000 little cheaters, and we lost tens of thousands –
$60,000, $70,000 – to the little cheaters. We think about the big
cheaters, but the reality is that the economic activity that we need to
worry about is all the little cheaters. That is the first step.
One of the things that happens in an
organization is that you get to observe bad behavior. If you think about
it, there is something really asymmetrical about observing good
behavior and observing bad behavior. Bad behavior, when you see it, is
incredibly salient. You see people behaving a certain way, and then
there is a chance that you would find that this is actually acceptable.
Imagine a consulting company that has a
policy that says if you stay until nine o’clock in the evening, you get
to order in dinner and get a black limo to come and pick you up to go
home. Some people stay late. One person stays in until nine, orders
food, takes it with him. At 9:01, he is downstairs. This is incredibly
salient to everybody that, if he waited one minute, he obeyed the law.
What happens in cases like this is that very quickly everybody is gone
at 9:01. It is clearly not fulfilling the goal of the organization. It
stays within the rules, but is really abusing things. From there on, you
can see other deterioration.
We see things like that happening all
the time, and organizations have these challenges of how flexible to
make the rules. I have looked, over the last few years, at all kinds of
codes of conduct for different organizations. They are all being put in
place with good meaning. But they are so fuzzy. We care about our
customers. We have fiduciary responsibilities.
They are so general that the range of
gray zones within them allows good people to really misbehave. By the
way, one of the interesting questions is what is the role of leadership
in all of that? To what extent can a leader change how people in the
organization behave from this perspective? I do not know.
Another interesting question is the
question of whistleblowers…. The U.S. recently changed the regulation on
whistleblowers, so companies are now told to treat whistleblowers
nicely, and they also get a bigger share of what the U.S. government
recovers in this new legislation. But is this really what is going to
happen? I get lots of emails from whistleblowers, and with one
exception, they were all women. It is not that more women write to me
than men. This will sound not nice, but I think that it is easier for
women to be whistleblowers because they do not start by being part of
the boy’s club. Every whistleblower who wrote to me said that they have
basically become an outsider to society. They become an outsider to the
people who they betrayed within the organization, but also their regular
friends stop trusting them.
It is a really interesting thing. I
think of my kids. I have two kids. When one of them comes and says, oh,
my brother or my sister did this. I say, I want you to resolve the
problem yourself. Even with kids – and I am sure they might have
legitimate concerns – somehow appealing to a higher external authority
rather than solving things internally is offensive in terms of how the
system is created.
Businesses need to think about what the
code of conduct is, how specific versus general it is, how good behavior
and bad behavior are transmitted … through the organization, and then
what do we do with whistleblowers? How do we make it acceptable? Because
whistleblowers come from time to time, but if they could come in
earlier, the organization might save itself a lot of trouble….
Grant: What is interesting about
the whistleblowers is that they are the counterpoint in some ways to the
little cheaters. Or are they, in fact, the same people?
Ariely: I do not know if the
whistleblowers are pure people. I doubt it. Are they the people who
never tell their spouse, “Honey, you look good in that dress,” or
something like that? Or who are socially polite and do not tell white
lies? I do not think this is what they are.
There is something else. I have had lots
of discussions with big cheaters – insider trading, accounting fraud,
people who have sold games in the NBA, doping in sports. With one
exception, all of them were stories of slippery slopes. You look at the
sequence of the events – you look at the end – and you say, my goodness,
what kind of monster would do this? But then you look at the first step
they took and say, I can see myself under the right amount of pressure
behaving badly. Then they took another step, another step, and another
step. Most organizations go down a slippery slope rather than having
some vicious, vicious plan….
I will give you one example: doping in
sports. Think about cycling. I talked to all kinds of cyclists who doped
– not Lance Armstrong. One story was a guy who at some point got an
address for a physician from one of his team members. He went to that
physician – somebody with a white coat and a stethoscope – and that
person gave him a prescription for the pharmacy. He went to the
pharmacy, and he got EPO, which is a drug that increases the production
of red blood cells. It is used for cancer treatment. His insurance paid
for it because he had a prescription.
He got the injections. The first time he
injected himself, he was thinking about it. But he said after that it
just became part of his routine. It was just one of the many, many steps
he was taking throughout the day – vitamins, do this, do this, do this.
But after he started doing that, then he realized that everybody was
doing it. Then they started doing it in public.
Then he moved to another team, and in
that team, the people who were running the team were getting people to
order what drugs they want in addition to EPO. Moving from just EPO to
another drug was very simple. Later on, there was a shortage of EPO, but
he knew some people from a Chinese cycling team, so they put him in
touch with a factory that produces EPO, and he imported it. Then he
started selling drugs. You could see how things go on.
Eventually, he was a drug dealer. But
that is not how he started. That is the issue. Almost all the people I
talked to, again aside from one, basically looked at the end and said,
how did I get here? This is not me. If you remember when Lance Armstrong
was on Oprah, she asked him, when you were in the middle of
things, did you feel you were cheating? Did you feel you were doing
something wrong? He said no. He sounded like a psychopath when he was
saying that. But from everything I know, he was right. He was truthful
in that moment.
When you are in the midst of it, you are
in a very, very different mindset. In your mind, you are not a
psychopath, and you are not cheating. You are doing what everybody else
is doing, and it is true that you do not talk about it. But that is how
things are getting done.
Grant: If you think about the
idea of starting with a gateway drug and then falling down this ladder
of rationalization, if I am a leader, it makes me think a little bit
differently about my role. What I want to be doing is study the cases
where people have committed ethical or legal violations, look backward
at where they started and then define my code of conduct more clearly
around those initial steps. Is that where you would come down?
Ariely: Exactly. Because if you
think about that, it means that the first step is incredibly dangerous….
It actually has tremendous ramifications, particularly if you think
that it is an observable act. I recently came from a discussion of honor
code in the military…. There is a real tradeoff between how much you
punish a person who is taking the wrong step if you think about that
person versus thinking about the organization. It is a very different
story….
About seven years ago, there was a big
honor code violation at Duke. A lot of the students started a simulation
from the same number, so they ended up with the same result, so [it was
clear] there were copying from each other. At the time, I was teaching
at MIT, and there was a story, I think, in The Wall Street Journal.
I brought the story to the class, and we were talking about the
cheating at Duke, and the students said we do it all the time. Why are
you expelling those students?
They were probably right…. I suspect
that those students did not understand the seriousness of what they were
doing. They were probably in the system where people were collaborating
for a long time, and there was deterioration…. The students probably
got a harsher punishment than they would deserve if you thought of them
as individuals.
But for the organization, it really
helped. Six years later, it is really clear to the students what [is]
right and the wrong…. There was this interesting tradeoff between the
benefit of the individual and what we think about forgiveness versus
what we think about the cohesiveness of the organization and how clear
the rules are.
Grant: Yes. It is a classic
question of retribution versus deterrence. It seems like, in this case,
you are at least willing to err a little bit on the side of deterrence
even if it unfairly punishes a few.
Ariely: Yes. I am not sure that I
would call it deterrence, but it would basically be for the strictness
and clarity of the rules – or the clarity of the norms and what is the
right and wrong behavior.
Grant: This is a little bit
frightening if we put together the different pieces of the puzzle that
you have constructed. If slippery slopes happen, and most people are
willing to cheat a little bit, what do you do to prevent people from
taking that first step?
Ariely: Codes of conduct are
incredibly important for companies. But companies are wrong in how
flexible they make these codes of conduct. When you have a serious code,
it is easier to see if you are on the right or wrong side of it. When
you have something that is very fuzzy, it is hard for us to see that we
are violating it. Think about something like Alcoholics Anonymous. The
rule is very clear. No drinking whatsoever. What would happen if the
rule was half a glass a day? We would get very big glasses. You would
drink today on account of tomorrow. There will be all kinds of
tradeoffs. In general, we do not like very clear-cut rules because we
understand the exceptions. We understand that we cannot create a good
rule. But good rules really help us. They help us to figure out for
ourselves what is good. Dieting, by the way, is the same thing. If you
have a clear rule about what you eat and do not eat, it is really easy….
If you think about the human brain as
being a rationalization machine that is going to rationalize what is
good for us in the short term – not what is good for us in the long term
and not what is good for the organization – rules eliminate some of
that ability to rationalize. It is not that it is a panacea because, if
you create strict rules, it makes lots of things much more complex. But I
think we need those….
Grant: Where do your ideas come from?
Ariely: Very infrequently from
academic papers. Mostly it is from talking to people. Some from reading
the news and seeing something interesting, but lots from talking to
people and seeing what people are struggling with and what are some of
the challenges. In the last six years, I am also getting lots of emails
from people who read stuff that I wrote about and ask me questions. I
will give you one example.
I got an email from a woman who told me
that she was diagnosed with brain cancer, and she asked me how to tell
her kids. I was a burn patient, and I did studies on how to remove
bandages – remove them quickly, remove them slowly – and she made the
connection. She said, should she tell them all at once? Should she tell
them over time?
Now it is not exactly the same question
as removing bandages, so I did not have an answer for this. I talked to
all my physician friends. Nobody knew what is the right answer. I was in
New York 10 days later, so I met her for coffee, and we discussed
this…. Eventually the conclusion was, if her kids ever found out that
she was misleading them, it would be very hard to regain trust so maybe
she should tell them all at once. But this question of how you reveal
bad news started becoming very interesting for me. This was about three
years ago.
Now we have a big project in which we
are following doctors around the hospital observing how they tell really
bad news to patients, [such as] cancer, end-of-life treatment. We are
trying to figure out what are the mistakes and what are the better ways
to do that. Things like that happen, where you basically say, my
goodness, this is a big question that people are struggling with. We do
not know the answer. Maybe we should try and figure it out…
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