rotmanmagazine.ca / 71unintentional acts of cheating. These behaviours fall under the
broader category of bounded awareness — a state in which we sys-
tematically fail to notice relevant information that falls outside of
our attention at the time of making a decision.
Individuals can also exhibit bounded ethicality, making uneth-
ical decisions that are outside of their own awareness and incon-
sistent with their consciously-held values. Both bounded awareness
and bounded ethicality operate at an unconscious level: Individu-
als are not aware of how the biases that arise from their limited
capacity to notice key information influence their judgments.
Examples of bounded ethicality include implicit prejudice
and conflicts of interest. Even individuals who espouse equality
and diversity might discriminate based on gender or race with-
out their awareness. Such implicit biases stem from stereotypical
associations that even individuals who consciously strive to be
unbiased have difficulty overcoming. Furthermore, conflicts of
interest can operate outside of an individual’s awareness. Audi-
tors, for instance, may exhibit bounded ethicality when they fail
to recognize how the promise of becoming a future employer for
the audited firm precludes them from making impartial audits.
Because these biases operate at an implicit level, interven-
tions that would be aimed at addressing intentional acts of cheat-
ing do not necessarily apply. Therefore, scholars are developing
interventions aimed at mitigating them. For example, recent re-
search has demonstrated that employers evaluating candidates
separately exhibited a gender bias: They were more prone to hir-
ing men for math-related tasks and women for verbal-oriented
tasks, even when gender did not predict performance on these
tasks. In contrast, behavioural economist Iris Bohnet et al.
found that evaluating male and female candidates jointly rather
than separately eliminated reliance on gender stereotypes in hir-
ing decisions.perspective, if each of the 13,000 policy holders in our experiment
had received the revised form, this would have resulted in an ad-
ditional $2 million in insurance premiums for the company. And this
is just from a small subset of policy holders, from one company.
In Ontario alone, auto insurance fraud accounts for up to
$1.6 billion yearly — three times the province’s budget to fight its
chronically-high youth unemployment rate. Just imagine what our
small, costless change to the audit form could do here.
Our findings show that the reason people fudge their numbers
is not that they’re cold blooded and calculating. If people only
cared about the likelihood of being caught and the magnitude of
the punishment, moving the signature field to the top should make
no difference. Instead, many people do care about being virtuous,
and moving the signature field to the top makes it possible for them
to ignore the devil on their shoulder, encouraging them to fudge the
numbers.
It’s important to point out though that there’s nothing special
about morality: We can find mismatches between what people say
they care about, and how they act in many other areas. Even in life
and death type of situations. Take, for example, organ donation.
Every day more than 20 people die in the U.S. because of a lack of
available organs. In Canada, it’s two people every three days.
If everyone registered as an organ donor today, this crisis
would be a thing of the past. So I ask you, why are half of all
the people in the U.S. and three quarters of the people in Canada
not registered? If you believe that actions speak louder than
words, you would say, ‘People just don’t care. Even Canadians!’
On the other hand, if you ask people ‘Do you support organ
donation?’, everything looks much rosier: About 90 per cent of
people say they do. So, which one is it? If we believe that this
mismatch between what people say they care about, and how they
act, is mostly due to situational circumstances, then we should bewilling to nudge them towards more authentic behaviour.
The good news is, most people are good. And if we become
more sensitive to situational circumstances, we may be able to
nudge them towards more authentic behaviour. This approach
holds great potential in many areas, beyond insurance fraud and
organ donation. Credit card delinquency, obesity, and energy
conservation come to mind immediately. If we can systematically
and responsibly harness these insights, what a wonderful world
this could be.Nina Mažar is an Associate Professor of Marketing and
Co-Director of Behavioural Economics in Action at Rotman
(BEAR) at the Rotman School of Management. She is on
leave until November of this year to serve as the Behav-
ioural Scientist of the Global INsights Initiative (GINI) at
The World Bank in Washington DC. In 2014 she was named one of the 40
Most Outstanding B-School Profs Under 40 in the World by the business
education website Poets&Quants. This article is adapted from her presenta-
tion at TEDx Toronto.Rotman faculty research is ranked #3 globally by the Financial Times.