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I'm Adam Grant I'm here with Dan arieli
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leading behavioral Economist at Duke
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author of predictably irrational the
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upside of irrationality we're going to
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talk today about his newest book the
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honest truth about dishonesty Dan
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welcome my pleasure thanks thanks for
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inviting me Enlighten Us in
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organizations how common is
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dishonesty very common um but the the
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thing that is common is not big cheaters
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the common things are little
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cheaters and there's a couple of things
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that are special about organizations but
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but let's take one step back and ask the
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question about cheating um so what we
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find is that lots of people can cheat a
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little bit and what happens is that if
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we cheat a lot we face not being caught
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we Face the possibility that we will
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feel bad about ourselves so we play a
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game within ourselves you know sometimes
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we think about game theory is kind of a
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game between two parts is it's also a
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game within a person so you say to
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yourself I want to think of myself as
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good honest wonderful person and I
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selfishly want to benefit from this
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honesty and it turns out that you can
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cheat a little bit and still feel good
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about yourself so that is the general
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lesson that we find and just kind of to
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give you an estimation we ran
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experiments on cheating close to 50,000
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people so far and we find a handful of
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big cheaters and we lost a few hundred
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dollars to Big cheaters and we we found
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more than 30,000 little cheaters and we
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lost tens of thousand 60 70,000 to the
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little cheaters so you know we think
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about the big cheaters but the reality
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is that the economic because there are
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few of them the economic activity that
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we need to worry about is all all the
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little cheaters okay so that's that's
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the first step now one of the things
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that happens in organization is that you
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get to observe bad behavior right and if
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you if you can think about there's
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something really asymmetrical about
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observing good behavior and observing
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bad Behavior so uh bad behavior uh when
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you see it it's incredibly Salient you
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see people behaving a certain way and
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then there's a chance that you would
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find that this is actually acceptable so
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imagine a consulting company that has a
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policy that says if you stay until 9:00
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in the evening you get to order in
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dinner and get a black limo to come and
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pick you up to go home and and some
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people stay late and one person stays
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until orders food takes it with him at
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9:01 he's downstairs this is incredibly
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sing to everybody that he waited 1
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minute he obeyed win the law and what
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happened in cases like this is very
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quickly everybody at 9:01 is gone it's
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clearly not fulfilling the goal of the
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organization it stays within the rules
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but really kind of abusing things and
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from there on you can see other
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deterioration so we see things like that
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happening all the time and in
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organization ations have this challenge
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of how flexible to make the rules so
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I've I've looked over the last few years
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at all kinds of code of conduct for
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different organization and I think
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they're all being put in place with good
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meaning but they're so fuzzy like we
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care about our customers we have fuci
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responsib you know they're so General
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then the range of gray zones within them
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allows good people to really uh
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misbehave by the way one of the
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interesting question is what is the role
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of leadership in all of that and to what
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extent can a leader
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change how people how people in the
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organization behave from from this
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perspective and I don't know um another
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interesting question is the question of
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whistleblowers um and I haven't studied
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whistleblower it's very tough and you
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know the US recently changed the
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regulation on whistleblowers so
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companies are now told to treat
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whistleblowers nicely and they also get
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a bigger share of what the US government
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recovers in in this new legislation but
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is this really what's going to to happen
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and I I get lots of emails from
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whistleblowers and with one exception
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they were all women and it's not that
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more women right to me than than men and
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and I think this is this will sound not
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nice but I think that it's easier for
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women to be whistleblowers because they
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don't start by being part of the boys
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club
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and everybody every whistleblower who
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wrote to me said that they basically
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become an outsider to society and they
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become an outsider to the people that
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they betrayed within the organization
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but also the regular friends stop
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trusting them and it's a really
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interesting thing right so I I I think
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of my kids I have two kids and when one
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of them come and say oh my brother or my
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sister did this I said I want you to
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solve the problem yourself right so even
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with didn't kids and I'm sure they might
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have legitimate concerns somehow
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appealing to a higher external Authority
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rather than solving things internally is
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offensive in terms of kind of how the
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system is created so so anyway um so I
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think businesses need to think about
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what is the code of conduct how specific
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versus General it is how is good
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behavior and bad behavior transmitted
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through Society to through their
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organization um and then what do we do
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with uh things like whistleblowers how
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do we how do we make it acceptable
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because you know whistleblowers come
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from time to time H but if they could
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come in earlier the organization might
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save themselves lots of trouble but by
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the time they everybody everything is
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waiting so long it could have be
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devastating now what's interesting about
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the whistleblowers actually is that
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they're sort of the CounterPoint in some
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ways to the little cheaters it would
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seem or are they in fact the same people
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so I don't know if they I don't know if
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those people who are uh whistleblowers
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are kind of pure people I doubt it uh
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right are they the people who never tell
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their spouse honey you look good in that
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dress or something like that or being
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socially polite and don't tell White
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Lies I don't think this is what what
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they are and um I'll tell you something
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else
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um we I've done lots of discussions with
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big cheaters inside trading accounting
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fraud people who've done um selling
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games in the NBA all kinds of things
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like that doping in sports and with one
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exception all of them were stories of
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slippery slopes all of them yeah you
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look you look at the sequence of the
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events you look at the end and you say
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my goodness what kind of monster would
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would do this but then you look at the
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first step they took and you say I can
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see myself under the right amount of
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pressure behaving badly and then they
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took another step another step another
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step um and I think most of organization
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go down a slippery slope rather than
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having some vicious vicious plan and the
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question is at that slippery slope at
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what point is it passing a threshold
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that somebody is saying something is
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really wrong here and in in some sense
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you have to not buy into the
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mindset of the slippery slope the
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question is how can you how can you
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actually get there how can you be an
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outsider to this so so I think that's
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probably the benefit the benefit is
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probably being an outsider and not not
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buying into this worldview of what's
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going on so so I'll give you one example
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um doping in sports think about cycling
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I talk to all kinds of cyclist who doped
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not Lance Armstrong um and and the story
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is basically one story was a guy who at
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some point got a an address for a
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physician from one of his team members
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and he went to that physician somebody
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with a white coat and a St scope and and
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that person gave him a prescription for
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the pharmacy and he went to the pharmacy
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and he got EPO which is a drug that
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increases the production of red blood
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cells it's a used for cancer treatment
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and his insurance paid for it and it
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because he got he had a prescription and
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he got the injections and he the first
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time he injected himself he was thinking
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about it but he said after that it just
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became part of his routine it was just
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one of the many many steps he was taking
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throughout the day vitamins do this do
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this do
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this but after he started doing that
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then he realized everybody was doing it
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and then they started doing it in public
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and then he moved to another team and in
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that team the people who were running
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the team were getting people to order
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what drugs they want in addition to EPO
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and moving from just EPO to another drug
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was very simple and then later on there
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was a shortage of epo but he knew some
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people from a Chinese his cycling team
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so they put him in touch with a factory
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that produces EPO and he imported it
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then he started selling drugs I mean you
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you could see how things go on
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eventually he was a drug
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dealer but but this is not how he
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started right and I think that's that's
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the issue and almost all the people I
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talked to again aside from one basically
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looked at the end and said how did they
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get there this is not me but when you're
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in it and if you remember when Lance
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Armstrong was in opra uh she asked him
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when you were in the middle of things
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did you feel you were cheating did you
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feel you were doing something wrong he
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said no and he sounded like a psychopath
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when he was saying that but from
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everything I know he was right he was
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truthful at that moment when you're in
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the midst of it you're in a very very
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different mindset and in your mind
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you're not a psychopath and you're not
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cheating you're doing what everybody
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else is doing and it's true that you
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don't talk about it but that's that's
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how things are getting done well that
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that slippery slope if you think about
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the idea of starting with a gate a drug
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and then falling down sort of this
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ladder of rationalization it if I'm a
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leader it makes me think a little bit
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differently about my role what I want to
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be doing is actually studying the cases
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where people have committed ethical or
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legal violations Looking Backward at
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where they started and then defining my
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code of conduct more clearly about those
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initial steps is that where you would
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come down I think exactly because you
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know if you think about that it means
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that the first step is incredibly
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dangerous because it's not just the
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first step and usually we say oh it's
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just a small step or it's just the
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beginning no it's it's not just the
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beginning it actually has tremendous
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ramification particularly if you think
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that it's an observable act so um as we
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were talking earlier I I recently came
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from a discussion of onor code in the
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military the Virginia Military Academy
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Navy and so on um and and there's a real
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tradeoff between a person is taking the
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wrong step how much do you punish them
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if you think about that person versus
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thinking about the organization and it's
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a very different story on actually you
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remember a Duke there was this big honor
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code violation so maybe seven years ago
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there was a big honor code violation at
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Duke lots of the students started the
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simulation from the same number so they
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ended up with the same results so they
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knew they were A coping from each other
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and at the time I was cheating I was
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cheating I was teaching just a little
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bit just a little and I was teaching at
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MIT uh and there was a story I think in
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the Wall Street Journal and and I I
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brought the story to the class and we
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were talking about the cheating Duke and
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the students said we do it all the time
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why why are you expelling those students
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and and I think they're probably right I
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think that the students I I don't know
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the case it was not I was not there at
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the time and also it's an owner code so
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it's a closed thing but I suspected
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those students did not understand and
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the seriousness of that what they were
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doing they were probably in a system
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where people were collaborating for a
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long time and there was deterioration
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and by creating this harsh punishment
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and eliminating lots of lots of students
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and you know giving them very very harsh
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punishment the students probably got a
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harsher punishment and they would
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deserve if you thought of them as
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individuals but for the organization it
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really helped because 6 years later it's
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really clear to the students what are
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the right and wrong
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levels and what do you step and don't
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step so I think there is this
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interesting tradeoff between the the
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benefit of the individual and what do we
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think about forgiveness versus what do
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we think about the cohesiveness of the
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organization and how clear the rules are
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yeah it's a classic question of of
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Retribution versus deterrence and it
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seems like in this case you're at least
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willing to air a little bit on the side
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of deterrence even if it unfairly
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punishes a few yeah I'm not sure I would
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call it deterrence but it would
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basically be for the strictness and
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Clarity of the rules for the clarity of
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what are the norms and what are the
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what's the right and wrong Behavior now
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this is this is a little bit frightening
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if we put together the different pieces
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of the puzzle that you've constructed if
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slippery slopes happen and most people
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are willing to cheat a little bit what
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do you do to prevent people from taking
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that first step yeah so so I think I
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think code of conduct are incredibly
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important for companies um but companies
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are wrong in how flexible they make
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these kind of code of conduct look like
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so
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um when you have a serious code it's
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easier to see if you're on the right or
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wrong side of it when you have something
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that is very fuzzy it's hard for us to
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see that we're violating it so think
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about something like Alcoholic Anonymous
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right the rule is very clear no drinking
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whatsoever what would happen if the rule
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was half a glass a day right we would
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get very big glasses you would drink
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today on account of tomorrow I mean
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there'll be all kinds of tradeoff
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and in general we don't like very
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clear-cut rules because we understand
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the exceptions we understand that we
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cannot create a good rule but good rules
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really help us and they help us to
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figure out for ourselves what's good and
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dieting by the way is the same thing if
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you have a clear rule about what you eat
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and don't eat it's really easy if every
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time you have to ask yourself about
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another Fork that's really really hard
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so if you think about the human brain as
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being a rationalization machine that is
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going to rationalize what's good for us
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in the short term not what's good for us
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in the long term and not what's good for
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the organization rules basically
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eliminate some of that ability to
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rationalize um and it's not that it's a
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Panacea right because if you create uh
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strict rules it it makes lots of things
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much more complex but I think we need
00:14:51
those let's take a step back you're
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obviously widely admired for generating
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some fairly unusual and unconventional
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ideas mostly I'm admired by my mother
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and daughter those are the most
00:15:03
important sources of AD admiration I
00:15:05
would argue but where do your ideas come
00:15:08
from so very infrequently from academic
00:15:12
papers um mostly it's from uh talking to
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people
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and some some from reading the news and
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seeing something interesting but lots
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from talking talking to people and
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seeing what people are struggling with
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and what are some of the challenges and
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now
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um and you know in the last I don't know
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six years I'm also getting lots of
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emails from people who read stuff that I
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I wrote about and ask me question I'll
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give you one example
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um I got an email from a woman who told
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me that she was diagnosed with brain
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cancer and she asked me how to tell her
00:15:47
kids so uh I I was a burn patient and I
00:15:51
did studies on how to remove bandages
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remove them quickly remove them slowly
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and she made a connection and she said
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should she tell them all at once she
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tell them H over time now it's not
00:16:02
exactly the same question as removing
00:16:04
bandages so I didn't have an answer for
00:16:06
this so I talked to all my physician
00:16:08
friends nobody knew what is the right
00:16:10
answer and I was in New York 10 days
00:16:13
later so I met her for for coffee and we
00:16:15
we discussed this because you know it's
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not something I feel comfortable
00:16:19
and and eventually the conclusion was
00:16:23
that if her kids ever found out that she
00:16:25
was misleading them they'll be very hard
00:16:27
to regain trust so maybe she should tell
00:16:29
them all all at once but this question
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of how do you reveal bad news uh started
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started becoming very interesting for me
00:16:38
this was about 3 years ago so now we
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have a big project in which we're
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following doctors around the hospital
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observing how they tell bad news to to
00:16:48
patients really bad news cancer and the
00:16:50
flight treatment stuff like that and
00:16:52
trying to figure out what are the
00:16:53
mistakes and what are the better ways uh
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to do that um so so things like that
00:16:59
happened where you basically say my
00:17:01
goodness this is a big question that
00:17:02
people are struggling with we don't know
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the answer maybe we should try and
00:17:07
figure it out and stuff like this is
00:17:08
happening all the time well it sounds
00:17:11
like paying attention then to the
00:17:12
questions that come on your plate is is
00:17:14
one source of ideas abolutely one
00:17:16
question for me to close on uh
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behavioral economics has gained a lot of
00:17:21
steam in the past decade it's I think
00:17:22
one of the most probably popular
00:17:24
scientific movements in history you are
00:17:27
a behavioral economist yet you have two
00:17:29
phds in Psychology and I've noticed
00:17:32
frequently that my work get labeled as
00:17:34
behavioral economics when in fact it's
00:17:35
coming from a psychological perspective
00:17:37
why is behavioral economics cooler than
00:17:39
psychology when in fact often they're
00:17:40
the same thing and what's the future of
00:17:42
these two fields in your view yeah so so
00:17:44
I'm not sure if it's cooler than
00:17:45
psychology is the right is the right way
00:17:49
um so here's the thing economics is both
00:17:53
a descriptive and a
00:17:55
prescriptive discipline it describes
00:17:58
something about how people behave and
00:17:59
then also tell policymaker and
00:18:01
businesses how to conduct things and I
00:18:04
think for a long time psychology has
00:18:06
basically stayed on the descriptive side
00:18:08
here's how people behave and economics
00:18:10
has gained tremendous effect impact
00:18:14
because of the prescriptive side of
00:18:16
things and behavioral economics in my
00:18:18
mind is basically a counteraction to
00:18:21
that right so if if um economic uh
00:18:26
academics would have stayed within the
00:18:28
University
00:18:29
I don't think anybody would want to
00:18:31
attack them I mean everybody's entitled
00:18:32
their own Theory right I mean why not
00:18:34
attack people in philosophy or history I
00:18:36
mean you can attack lots of other people
00:18:38
and we're really not attacking economics
00:18:41
in the disciplinary sense of you know
00:18:43
economics is a beautiful field of study
00:18:45
it explains maybe 30% of the human
00:18:47
variant it's great but when you take
00:18:51
this Theory and you say this is it and
00:18:53
this is everything and now you should
00:18:55
build Bridges and cities or you know the
00:18:57
equivalent tax system and Health Care
00:18:59
Systems and so on based on that now it
00:19:01
becomes dangerous so behavioral
00:19:03
economics in my mind is not against the
00:19:06
economic discipline as much as the
00:19:08
application of fa and I I'm actually
00:19:11
hopeful that we're not going to debate
00:19:13
each other because that's there's really
00:19:15
no no much point in this we really need
00:19:17
to be empirical so the point about
00:19:19
behavioral economics is the truth is we
00:19:21
have to be a bit more modest we don't
00:19:23
know that much the world is much more
00:19:24
complex and we should be open to
00:19:26
admitting that we don't know and we
00:19:28
should do
00:19:29
experiments and I'm imagining a future
00:19:32
in which every discipline does its own
00:19:33
thing but when we come to policy No
00:19:37
Child Left Behind taxes Healthcare
00:19:39
whatever every discipline says here is
00:19:41
what I think are the important things
00:19:43
and here is how what I think is the
00:19:44
right setup and together we build the
00:19:46
right experiments and we see uh what's
00:19:48
working so I I'm hoping that we'll get a
00:19:51
field of
00:19:53
experimental social science that will be
00:19:56
used for government will be used for
00:19:57
businesses and so on
00:19:59
and the input for it could be everything
00:20:00
right why why not have philosophy and
00:20:03
why not have sociology and anthropology
00:20:05
and psychology and economics it's all
00:20:06
it's all perfectly fine so that's my U
00:20:09
wishful thinking for the future I think
00:20:11
it's an exciting Vision let's bring
00:20:13
great thinkers together let them
00:20:15
collaborate on the design of experiments
00:20:17
agree on the outcomes in advance and
00:20:19
then let the best policy win that's
00:20:21
right thank you Dan my pleasure
00:20:26
[Music]
