The (Honest) Truth About Dishonesty

So what should we do about dishonesty? We recently experienced a tremendous financial crisis, which has provided an excellent opportunity to examine human failure and the role that irrationality plays in our lives and in society at large. In response to this man-made disaster, we’ve taken some steps toward coming to terms with some of our irrational tendencies, and we’ve begun reevaluating our approach to markets accordingly. The temple of rationality has been shaken, and with our improved understanding of irrationality we should be able to rethink and reinvent new kinds of structures that will ultimately help us avoid such crises in the future. If we don’t do this, it will have been a wasted crisis.

MEMENTO MORI

There are a lot of possible connections one can draw between Roman times and modern-day banking, but perhaps the most important of them is memento mori. At the peak of Rome’s power, Roman generals who had won significant victories marched through the middle of the city displaying their spoils. The marching generals wore purple-and-gold ceremonial robes, a crown of laurels, and red paint on their face as they were carried through the city on a throne. They were hailed, celebrated, and admired. But there was one more element to the ceremony: throughout the day a slave walked next to the general, and in order to prevent the victorious general from falling into hubris, the slave whispered repeatedly into his ear, “Memento mori,” which means “Remember your mortality.”

If I were in charge of developing a modern version of the phrase, I would probably pick “Remember your fallibility” or maybe “Remember your irrationality.” Whatever the phrase is, recognizing our shortcomings is a crucial first step on the path to making better decisions, creating better societies, and fixing our institutions.

THAT SAID, OUR next task is to try to figure out more effective and practical ways to combat dishonesty. Business schools include ethics classes in their curricula, companies make employees sit through seminars on the code of conduct, and governments have disclosure policies. Any casual observer of the state of dishonesty in the world will quickly realize that such measures don’t get the job done. And the research presented here suggests that such Band-Aid approaches are doomed to fail for the very simple reason that they don’t take into account the psychology of dishonesty. After all, every time policies or procedures are created to prevent cheating, they target a certain set of behaviors and motivations that need to change. And generally when interventions are set forth, they assume that the SMORC is at play. But as we have seen, this simple model has little to do with the driving forces behind cheating.

If we are really interested in curbing cheating, what interventions should we try? I hope it is clear by now that if we are to stand a chance of curbing dishonesty, we must start with an understanding of why people behave dishonestly in the first place. With this as a starting point, we can come up with more effective remedies. For example, based on our knowledge that people in general want to be honest but are also tempted to benefit from dishonesty, we could recommend reminders at the moment of temptation, which, as we’ve seen, are surprisingly effective. Similarly, understanding how conflicts of interest work and how deeply they influence us makes it clear that we need to avoid and regulate conflicts of interest to a much higher degree. We also need to understand the effects that the environment, as well as mental and physical depletion, plays in dishonesty. And of course, once we understand the social infectiousness of dishonesty, we could take a cue from the Broken Windows Theory to combat the social contagion of cheating.