The (Honest) Truth About Dishonesty

Later that day, Jennifer got the report back with a note from her boss. It read, “I don’t like these numbers. Please gather your team and get me a revised version by next Wednesday.” Now, there are many reasons why her boss might not have “liked” the numbers, and it wasn’t entirely clear to her what he meant. Moreover, not “liking” the numbers is an entirely different matter from the numbers being wrong—which was never implied. A multitude of questions ran through Jennifer’s head: “What exactly did he want? How different should I make the numbers? Half a percent? One percent? Five percent?” She also didn’t understand who was going to be accountable for any of the “improvements” she made. If the revisions turned out to be overly optimistic and someone was going to take the blame for it down the road, would it be her boss or her?

THE PROFESSION OF accounting is itself a somewhat equivocal trade. Sure, there are some clear-cut rules. But then there is a vaguely titled body of suggestions—known as Generally Accepted Accounting Principles (GAAP)—that accountants are supposed to follow. These guidelines afford accountants substantial leeway; they are so general that there’s considerable variation in how accountants can interpret financial statements. (And often there are financial incentives to “bend” the guidelines to some degree.) For instance, one of the rules, “the principle of sincerity,” states that the accountant’s report should reflect the company’s financial status “in good faith.” That’s all well and good, but “in good faith” is both excessively vague and extremely subjective. Of course, not everything (in life or accounting) is precisely quantifiable, but “in good faith” begs a few questions: Does it mean that accountants can act in bad faith?^* And toward whom is this good faith directed? The people who run the company? Those who would like the books to look impressive and profitable (which would increase their bonuses and compensation)? Or should it be directed toward the people who have invested in the company? Or is it about those who want a clear idea of the company’s financial condition?

Adding to the inherent complexity and ambiguity of her original task, Jennifer was now put under additional pressure by her boss. She’d prepared the initial report in what seemed to her to be good faith, but she realized that she was being asked to bend the accounting rules to some degree. Her boss wanted numbers that reflected more favorably upon the client company. After deliberating for a while, she concluded that she and her team should comply with his request; after all, he was her boss, and he certainly knew a lot more than she did about accounting, how to work with clients, and the client’s expectations. In the end, although Jennifer started the process with every intention of being as accurate as possible, she wound up going back to the drawing board, reviewing the statements, reworking the numbers, and returning with a “better” report. This time, her boss was satisfied.

AFTER JENNIFER TOLD me her story, I continued to think about her work environment and the effect that working on a team with her boss and teammates had on her decision to push the accounting envelope a bit further. Jennifer was certainly in the kind of situation that people frequently face in the workplace, but what really stood out for me was that in this case the cheating took place in the context of a team, which was different from anything we had studied before.

In all of our earlier experiments on cheating, one person alone made the decision to cheat (even if he or she was spurred along by a dishonest act of another person). But in Jennifer’s case, more than one person was directly involved, as is frequently the case in professional settings. In fact, it was clear to Jennifer that in addition to herself and her boss, her teammates would be affected by her actions. At the end of the year, the whole team would be evaluated together as a group—and their bonuses, raises, and future prospects were intertwined.

I started to wonder about the effects of collaboration on individual honesty. When we are part of a group, are we tempted to cheat more? Less? In other words, is a group setting conducive or destructive to honesty? This question is related to a topic we discussed in the previous chapter (“Cheating as an Infection”): whether it’s possible that people can “catch” cheating from one another. But social contagion and social dependency are different. It’s one thing to observe dishonest behavior in others and, based on that, alter our perceptions of what acceptable social norms are; it’s quite another if the financial welfare of others depends on us.