Rotman on the Passivity behind Financial Deceit: B-School Research

Doing the right thing, morally, is easiest when it’s made, well, easy for the individual concerned. The flipside is that people are more likely to cheat when it simply means overlooking something that they know to be wrong.

This is the crux of findings made by Nina Mažar, a marketing professor at Toronto's Rotman School of Management, in collaboration with colleague, Scott Hawkins.

“People tend to accept the status quo,” reasoned Mažar as she explained the results of an experiment which scrutinized people’s behavior when faced with choices involving personal financial gain. In the Rotman researcher’s experiment, participants were most likely to cheat when an incorrect answer that would give them more money was automatically supplied and, among the cheaters, subsequently ignored. Conversely, people were least likely to cheat when it meant actively changing a correct answer into one which would leave them financially better off.

It sounds pretty commonsensical but the Rotman professor believes that methods of self-reporting are missing a trick here. If, for example, you make people fill in all the boxes (or pre-fill them based on prior responses) on an online tax or insurance form - even if that value ends up being rightly written in as US$0 - the suggestion is that fewer people will accidentally ‘forget’ to declare things they ought to be declaring. The potential value here is such that Mažar has already held discussions with the Canadian revenue agency.

World Bank seeking to use insights from behavioral science

In addition to these findings, published in a recent paper for the Journal of Experimental Social Psychology, Rotman’s Nina Mažar has joined a new World Bank team tasked with applying insights from behavioral science to issues of international development.

The Global Insights Initiative (GINI) was launched by the World Bank last month and a report has already been released with the aim of outlining how a greater understanding of human behavior could make development policies more efficient. For example, in speaking at the World Bank initiative’s launch, Dan Ariely - a marketing professor at Duke Fuqua – spoke of an experiment in which he had found that people who had received a small bribe were more likely to go on and cheat or steal in other tasks and suggested that lifting the lid on this type of behavioral process could help policymakers to better understand how and why governments end up suffering from widespread corruption.