So, of course, if you work in a bank and your bank people are perfectly honest, and then you have other banks where people try all the funny procedures and they don't have Chinese walls and they sell stocks that are not good to their clients to take them off of their hands and so on.
All of a sudden if you're honest, you would do well by your clients, but you would be less wealthy.
And actually, one of our findings is that people's standards for morality are dramatically influenced by the behavior of people around them and I think that if you have a situation where bankers are friends with bankers and politicians are friends with politicians and they see people in their social circle misbehaving in a dishonest way there is basically a temptation to match that behavior and find a similar behavior, find it socially acceptable, follow up on it and continue behaving this way.
And of course, the really sad thing about it is that those things have a propensity for a slippery slope and escalation, which I think is exactly what we've seen over the past few years and sadly I have not seen any serious attempt to stop this escalation and even to reset it, but we have to because we are getting into a worse and worse situation over time.
So, often we think about people as agent, so we decide and we act, and we act on our preferences and we are kind of executing our own internal state, but the reality is that the decisions people often make are best described by the environment in which they are placed.
When we place people in some environments they are able to cheat to a higher degree and when they are placed in a different environment, that same person with the same mindset ends up cheating to a much lower degree. One of them has to do with the degree to which we can justify our dishonesty and, in particular, the distance of the dishonest act from money.What that means is that when we have an environment in which people can distance themselves from the act of cheating, they're not cheating for money, they're cheating for a piece of plastic, all of a sudden this environment can facilitate to a much higher degree.There are many other influences like this and what this means is that we need to think about the environment, we need to think about regulation, we need to think about rules, we need to think about professional cause of ethics because those things eventually have much more to do with how people behave than individual personality.Experimenter, I solved X problems, give me X tokens”.Now, people look into our eyes and lie for pieces of plastic and not for money and what we find was the people basically doubled their cheating.What makes somebody lie sometimes and tell the truth other times?When people face this question about why people lie sometimes and don't lie other times, the common answer has to do with something about the internal state about the person.Why do students cheat on tests when it will effect them later on in their lives?So first of all, I think that students for sure, but most people in general, don't think much about what will happen later in lives, we have this general problem of thinking about short-term and not thinking about long-term and this is everywhere, right, it's about why we over-eat and under-exercise, and under-save and text and drive, don't take our medication on time and have unprotected sex, all of those behaviors are due to the fact that we don't think about long-term.Can you name a situation when somebody was dishonest and it backfired on them? So of course there are many cases where dishonesty has backfired and I think the best example of this is the financial crisis.When Greenspan went in front of Congress he said that he thought that companies would self-regulate themselves, right, that the individual traders and bankers of course have an incentive to be dishonest because they get to pocket a tremendous amount of money from this activity- something that is good for them in the short-term, but maybe not so good in the long-term.