Economists have often modelled human decision makers as completely rational

Economists have often modelled human decision makers as completely rational. According to this model, rational people know their own preferences, gather and accurately process all relevant information, and then make rational choices that advance their own interests. However, Herbert Simon won a Nobel Prize in economics by pointing out that people are rational, but only boundedly so in that they seldom gather all available information, they often do not accurately process the information that they do gather, nor do they necessarily know what it is that will make them happy. People are rational, but boundedly so. If the last fifty years of psychological research has proven anything, it’s that the situational often dominates the dispositional. That is to say, our disposition or desire to be good people can be overwhelmed by psychological or organizational factors that we may not even be aware of. These factors adversely affect ethical decision making as well as economic decision making, meaning that people are boundedly ethical as well as boundedly rational. The basic notion, as spelled out by Professor Ann Tenbrunsel and her colleagues, is that systematic and predictable organizational pressures and psychological processes cause people to engage in ethically questionable behaviors that are inconsistent with their own preferences. Various factors cause us to make unethical decisions that we later regret. For example, although most of us want to act ethically, we also wish to please authority figures. Therefore, if our boss asks us to do something unethical, we may do it without even realizing our mistake because we are focusing on pleasing the boss rather than on the ethical dimensions of the issue facing us. To take another example we also have a natural desire to be “part of the team” at work. Therefore, if a questionable action advances the team’s interests, as we perceive them, we may act unethically because, again, we are focusing upon achieving the team’s goals rather than adhering to our own ethical standards. Most of us want to act ethically, and are certain that we will because we just know we’re good people. But most of us are also overconfident regarding our own ethicality. This can lead to complacency that causes us to make decisions containing ethical dimensions without reflecting deeply. We’re ethical, it’s true, but bounded so. I recommend a little humility. Only if we truly commit ourselves to being ethical people and diligently guard against the organizational pressures and psychological factors that put bounds upon our ability to be so, can we possibly realize our ethical potential. 2. Task: Watch the following videos: 3. Activity Based on the videos that you watch above, answer the following questions (approx 200-300 words) Do you think that acting ethically is just a matter of wanting to badly enough? Why or why not? What kinds of situational factors can you think of that might make it difficult for a well-intentioned person to always do the right thing? Can you think of a time when you did not live up to your own ethical standards? What caused you to depart from your own standards? Can you think of an example of a friend who acted unethically? Or someone in the news lately? Without making excuses for them, can you explain why they might have made bad ethical decisions even though they are generally good people? Do you think it’s possible to be completely rational when making ethical decisions? Why or why not? Activity 7 – Fundamental Attributions Error 1. Introduction: The objective of this video is to introduce students to the fundamental attribution error and its implications. One implication is that we often have a tendency to judge others unfairly because we do not take into account the situational factors that may have caused them to make unethical decisions. We jump to the conclusion that they are bad people because they did a bad thing. That said, it is important to remember that situational factors are usually explanations for while people err, they are not excuses. The best way to avoid this error, experts say, it to put ourselves in the shoes of others and try to envision the pressures they might have faced. The other implication of the fundamental attribution error is that we may be too easy on ourselves, if we are not careful. We may too readily find situational factors, organizational pressures and the like and then simply excuse our own conduct. The fundamental attribution error is the tendency to attribute “causes of behavior to actors (i.e., internal, dispositional factors) rather than the situation (i.e., external, environmental factors.” We see that other people have done bad things, and we assume that it is because of their character rather than the fact that they were, perhaps, striving so hard to please their superiors that they did not even notice the ethical issue that they flubbed. According to some psychologists, the other side of the coin from the fundamental attribution error is the actor-observer bias which is people’s tendency to over-emphasize the role of the situation in their own behaviors. They insist there’s nothing wrong with their character, because their errors are accounted for by some situational factor—the boss’s pressure, the need to feed their families, etc. Francesca Gino writes: “In particular, one mistake we systematically make is known as the correspondence bias. When making attributions as we evaluate others, we tend to ascribe too little influence to the situation and too much to their dispositions. In simpler terms, we tend to believe that people’s behavior reflects their unique dispositions and skills, when many times it actually reflects aspects of the situation in which they find themselves.” This sounds a lot like a different name for the fundamental attribution error. 2. Task – Watch the videos: 3. Activities: 1. If you met a famous white-collar criminal, what would you expect him (or, occasionally, her) to be like? 2. Why do you think it is so common to hear white collar criminals described by their neighbors as “the nicest guy,” “a real family man,” etc.? 3. Can you think of things that you have done in the past that you wish you hadn’t and that you do not believe represent your true character? 4. How can we endeavour to judge people’s character more accurately? Activity 4 – Confirmity Bias Activity 4 – Conformity Bias 1. Introduction Written and Narrated by Professor Robert Prentice Parents seldom accept as an excuse their child’s plea of “Hey everyone else is doing it.” However, psychological studies demonstrate that those same parents, and everyone else, tend to take their cues for proper behavior in most social contexts from the actions of others. This pressure is called the conformity bias. Psychologist Solomon Asch found that when he asked subjects to tell which of three lines is the same length as a fourth line, no one had difficulty unless they were placed in group with Asch’s confederates who gave obviously wrong answers. Under those conditions, almost all the subjects found it very painful to give the obviously correct answer in contradiction to the strangers’ wrong answers. In fact, most participants gave an obviously incorrect answer at least once during the study. This bias to conform is much greater, of course, when the others in the group are co-employees and/or friends, or when the correct answer is not right there in black and white – as it was in the Asch Study – but is instead a subjective—like an ethical questions. An employee at the accounting firm KPMG challenged the ethics of tax shelters that the firm was selling. He received a simple e-mail that said: “You’re either on the team or off the team.” Well everyone wants to be on the team. We all realize that loyalty is generally an important virtue. But it causes a pressure to conform and this pressure to conform, it can been argued, helped cause Ford employees to sell the Pinto despite awareness of its gas tank dangers, and helped A. H. Robins employees to continue to sell the Dalkon Shield contraceptive IUD despite knowing its ghastly medical consequences. The impairment of individual decision making known as “groupthink” – where people deciding in groups often make more extreme decisions than any individual member initially supports – can exacerbate the conformity bias. It can be reasonably argued that loyalty and groupthink helped Morton Thiokol employees to remain silent about known O-ring dangers that caused the Challenger space shuttled disaster. Psychological and organizational pressures can cause even people with good intentions to lie or otherwise act unethically. Good character isn’t always sufficient. As Albus Dumbledore told Harry Potter, “It takes a great deal of bravery to stand up to our enemies, but just as much to stand up to our friends.” 2.Task – Watch the following videos: 3. Activity: Based on the videos that you watch above, answer the following questions (approx 200-300 words) Can you think of a time when you did something just because everyone else was doing it—even when it didn’t feel quite right to you? Do you regret it now? It was recently observed that “cheating is contagious.” Does that sound true to you? Why or why not? If it is true, why might this be the case? Loyalty is generally considered a good quality. When a group to which you owe loyalty seems to be making a decision that seems unethical to you, how should you go about trying to balance your loyalty to the group against your own ethical integrity? Have you had an experience like that? If so, how did you resolve it? Can you explain how “groupthink” works? Can you think of a time when you have been subject to groupthink?

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