People have always lied and cheated. And businesspeople may have lied and cheated more than most: in a survey of American graduate students, 56% of those pursuing an MBA admitted to having cheated in the previous year, compared with 47% of other students. Cynics will not be surprised that people in ties sometimes tell lies—remember Enron? Plenty of executives have overstated their educational qualifications: Scott Thompson recently lost his job as boss of Yahoo! for it.
Yet businesspeople have given little serious thought to managing dishonesty. Managers tend to make two hoary contradictory assumptions. First, that there is a sharp line between good and bad apples, and that a manager’s job is to toss out the bad. Second, that everybody cheats if they have the right incentives and the wrong oversight, so managers must ensure that punishment is sure and swift.
A new book by Dan Ariely, “The (Honest) Truth about Dishonesty”, may reinvigorate the discussion. Mr Ariely is a social psychologist who has spent years studying cheating. He also teaches at Duke University’s Fuqua School of Business. He has no time for the usual, lazy assumptions. He contends that the vast majority of people are prone to cheating. He also thinks they are more willing to cheat on other people’s behalf than their own. People routinely struggle with two opposing emotions. They view themselves as honourable. But they also want to enjoy the benefits of a little cheating, especially if it reinforces their belief that they are a bit more intelligent or popular than they really are. They reconcile these two emotions by fudging—adding a few points to a self-administered IQ test, for example, or forgetting to put a few coins in an honesty box.
The amount of fudging that goes on depends on the circumstances. People are more likely to lie or cheat if others are lying or cheating, or if a member of another social group (such as a student wearing a sweatshirt from a rival university) visibly flouts the rules. They are more likely to lie and cheat if they are in a foreign country rather than at home. Or if they are using digital rather than real money. Or even if they are knowingly wearing fake rather than real Gucci sunglasses. They are more likely to lie and cheat if they have been stiffed by the victim of their misbehaviour—companies that keep customers in voicemail hell are frequent victims. And people are more likely to break their own rules if they have spent the day resisting temptation: dieters often slip after a day of self-denial, for example.