Why we think it's OK to cheat and steal (sometimes) | Dan Ariely

Predictable Irrationality: Insights from Personal Experience

Introduction to Predictable Irrationality

• The speaker introduces the concept of predictable irrationality, stemming from personal experiences in a hospital after suffering severe burns.

• The focus is on the painful process of removing bandages, highlighting two approaches: ripping off quickly versus slowly.

Pain Management and Patient Experience

• The nurses preferred the quick removal method, believing it minimized pain based on their experience and model of patient care.

• The speaker argues for a longer duration with less intensity, suggesting that patients should have input in their treatment decisions.

Experimental Inquiry into Pain Perception

• After leaving the hospital, the speaker pursued academic research to explore pain perception through experimental methods.

• Initial experiments involved using a carpenter's vice to simulate different pain intensities and durations on participants.

Findings on Pain Duration vs. Intensity

• Results indicated that longer durations with lower intensity would have resulted in less overall pain for burn patients.

• Additional insights revealed that starting with more painful areas could create a trend of improvement over time, enhancing patient comfort.

Cheating as an Example of Predictable Irrationality

Exploring Cheating Behavior

• The speaker transitions to discussing cheating behavior, prompted by events like the Enron scandal, questioning whether such behavior is widespread or limited to a few individuals.

Experimental Design on Cheating

• An experiment was conducted where participants solved math problems under time constraints and were incentivized to cheat by shredding their answers before reporting results.

Results of Cheating Experiment

• On average, participants who had the opportunity to cheat reported solving more problems than those who did not cheat; this suggests many people engage in minor dishonest acts rather than significant fraud.

Economic Perspective on Cheating

Cheating Behavior and the Personal Fudge Factor

Understanding Cheating Dynamics

• The expectation that lower probability of being caught would lead to increased cheating was not supported; many individuals cheated minimally, indicating insensitivity to economic incentives.

• Researchers questioned why people were not responsive to traditional economic rationality, leading them to explore psychological factors influencing behavior.

• A dual force concept emerged: the desire to maintain a positive self-image conflicts with the temptation to cheat slightly without feeling guilty.

Testing the Personal Fudge Factor

• To investigate this "personal fudge factor," participants were asked to recall either 10 books from high school or The Ten Commandments before being tempted to cheat.

• Those who attempted to recall The Ten Commandments exhibited no cheating behavior, regardless of their religious background; even atheists refrained from cheating when prompted with moral reminders.

• An experiment involving signing an honor code showed similar results; participants who acknowledged MIT's Honor Code did not cheat at all, despite MIT lacking an official honor code.

Increasing Cheating Opportunities

• In a separate experiment, researchers distributed Cokes and dollar bills in common refrigerators. While Cokes disappeared quickly, dollar bills remained untouched, highlighting differing perceptions of theft severity.

• A structured experiment involved giving participants opportunities for cheating under different conditions (cash vs. tokens), revealing that subjects doubled their cheating when removed from direct cash transactions.

Social Influences on Cheating

• Another study involved prepaying students for participation and observing their behavior when given a chance to cheat. Results indicated consistent minimal cheating across groups.

• An acting student introduced into the group dynamics influenced others' behaviors significantly; when he was perceived as part of their group, instances of cheating increased dramatically based on social cues.

Understanding Cheating and Morality in Behavioral Economics

The Influence of In-Group Norms on Cheating

• A University of Pittsburgh sweatshirt led to increased cheating among students, highlighting how visible cues can influence behavior. The moment a student left with money after being told they were done set a precedent for others.

• Cheating is more likely when it involves members of one's in-group. Observing someone from the same group cheat makes it seem acceptable, while seeing out-group members cheat raises awareness about honesty.

Reminders of Morality and Their Impact

• When individuals are reminded of their moral standards, such as through experiments similar to The Ten Commandments, instances of cheating decrease significantly.

• Increased distance from the act of cheating (e.g., financial transactions) correlates with higher rates of cheating. This suggests that proximity to ethical considerations influences behavior.

Implications for Financial Markets

• In financial markets, when people are incentivized to perceive reality in distorted ways (e.g., through high compensation), they may lose sight of ethical implications related to money.

• Complex financial instruments like stocks and derivatives create a greater distance from actual money, potentially leading to increased unethical behavior due to detachment from immediate consequences.

Testing Intuitions in Behavioral Economics

• Many common intuitions about human behavior are often incorrect. It is crucial to test these intuitions across various aspects of life including personal decisions and policy-making.

• Policies like No Child Left Behind or taxation require careful consideration and testing against our intuitions about their effectiveness and impact on society.

Insights from Nursing Experience

• A nurse named Ettie expressed that her emotional pain was overlooked during discussions about removing bandages, emphasizing the need for empathy in understanding others' experiences.