By controlling situations that create conflicts of interest, we can combat frauds and scandals better
The James B. Duke Professor of Behavioral Economics at Duke University, Dan Ariely is also the best-selling author of ‘Predictably Irrational: The Hidden Forces that Shape Our Decisions’. His next book ‘Perfectly Irrational’ will be published next month.
There are ways this Fudge Factor can expand or compress. It compresses (and people cheat less) when you remind them about their commitment to honesty or ask them to recite the Ten Commandments. The Fudge Factor expands under other conditions. If people see others cheating, they grow more comfortable doing the same. If people are not cheating in cash, but in intangible things like stock options, then they tend to cheat more. Still, even in these cases where we see more cheating, we see a lot of people cheating to a limited degree.
(This story appears in the 04 June, 2010 issue of Forbes India. To visit our Archives, click here.)