why do good people do bad things? · why do good people do bad things? robert prentice ... (goldman...

8
5/8/2012 1 WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice McCombs School of Business University of Texas “There are truly sinister businesspeople with sinister intentions, but for the most part, ethical and legal lapses are the stuff of average people who know better.” --Della Costa

Upload: duongliem

Post on 03-May-2018

214 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

1

WHY DO GOOD PEOPLE DO BAD THINGS?

Robert Prentice

McCombs School of Business

University of Texas

“There are truly sinister businesspeople with sinister intentions, but for the most part, ethical and legal lapses are the stuff of average people who know better.”

--Della Costa

Page 2: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

2

Concept of the Day:

Word of the Day:

Decision Making Errors to Be Aware Of:

1. OBEDIENCE TO AUTHORITY

Milgram study

Acceptability Heuristic

Egil “Bud” Krogh

Stock analysts in the dot-com boom

CFO fraud involvement

Page 3: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

3

2. CONFORMITY BIASAsch Study

Cheating Study

Betty Vinson & WorldCom

KPMG: “You’re either on the team or off the team

Petrified Forest

3. UNDUE OPTIMISM & OVERCONFIDENCE

Divorce

Driving/Teaching/Auditing

Morals, too.

Doctors & freebies

Evolutionarily adaptive

Enron employees were shocked, shocked

Page 4: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

4

4. SELF-SERVING BIAS.Affects how we collect, process, and remember information

Team credit

Affects fairness judgments

Managers with higher performance incentives fudge earnings more

Studies have found that the self-serving bias affects the judgments of:

• Physicians

• Attorneys

• Auditors

• Investment Bankers

• Securities Analysts

• Scientists

• Expert Witnesses

• Judges

• Stockbrokers

Page 5: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

5

5. FRAMINGHamburgers

How did Enron frame its goals?

How did Arthur Andersen frame its goals?

“Put on your management hats”—the Challenger debacle

• Audiotapes from Enron energy traders:

Greg: “It’s all how well you can weave these lies together, Shari.

Shari: I feel like I’m being corrupted now.

Greg: No, this is marketing.

Shari: OK.

Page 6: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

6

6. INCREMENTALISM“Boiling Frog Syndrome”

Hitler’s doctors

Abu Ghraib

Enron CAO Rick Causey

GSA Scandal

7. TANGIBLE vs. ABSTRACT

Product Engineers

Stock Analyst

Noreen Harrington (Goldman Sachs whistleblower)

Auto emissions testers

Page 7: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

7

8. LOSS AVERSION & ENDOWMENT EFFECT

Losses 2X gains

Endowment Effect

Dave Bliss

Martha Stewart, Frank Quattrone, AA…

“MOST HARMFUL ACTIONS ARE NOT COMMITTED BY PALPABLY EVIL ACTORS CARRYING OUT SOLITARY ACTIONS, BUT BY INDIVIDUALS ACTING WITHIN AN ORGANIZATIONAL CONTEXT.” --John Darley

“MOST UNETHICAL BEHAVIOR IS NOT DONE FOR PERSONAL GAIN, IT’S DONE TO MEET PERFORMANCE GOALS.” --David Gebler

Page 8: WHY DO GOOD PEOPLE DO BAD THINGS? · WHY DO GOOD PEOPLE DO BAD THINGS? Robert Prentice ... (Goldman Sachs ... sccepresentation2.ppt [Compatibility Mode]

5/8/2012

8

Remember the Word of the Day!