"Malaysia Prime Minister Mahathir Mohamad and the Sultan of Johor are seen in a blue Proton Saga... "When asked whether there is any tension with the sultan, Dr Mahathir said: “No, I don’t see anything because I went to see him and he drove me to the airport. I don’t want to comment on the sultans because if I say anything that is not good then it’s not nice because he is the sultan”"

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Sunday, May 24, 2009

"Comedy is the art of making people laugh without making them puke" - Steve Martin

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Dan Ariely on our buggy moral code | TED

"My interest in cheating started when Enron came on the scene, exploded all of a sudden, and I started thinking about what is happening here. Is it the case that there was kind of a few bad apples who are capable of doing these things, or are we talking a more endemic situation, that many people are actually capable of behaving this way? So, like we usually do, I decided to do a simple experiment...

It wasn't as if there was a few bad apples -- a few people cheated a lot. Instead, what we saw is a lot of people who cheat a little bit. Now, in economic theory, cheating is a very simple cost-benefit analysis. You say, what's the probability of being caught? How much do I stand to gain from cheating? And how much punishment would I get if I get caught? And you weigh these options out -- you do the simple cost-benefit analysis, and you decide whether it's worthwhile to commit the crime or not. So, we try to test this.

For some people. we varied how much money they could get away with -- how much money they could steal. We paid them 10 cents per correct question, 50 cents, a dollar, five dollars, 10 dollars per correct question.

You would expect that as the amount of money on the table increases, people would cheat more, but in fact it wasn't the case. We got a lot of people cheating by stealing by a little bit. What about the probability of being caught? Some people shredded half the sheet of paper, so there was some evidence left. Some people shredded the whole sheet of paper. Some people shredded everything, went out of the room, and paid themselves from the bowl of money that had over 100 dollars.

You would expect that as the probability of being caught goes down, people would cheat more, but again, this was not the case. Again, a lot of people cheated by just by a little bit, and they were insensitive to these economic incentives.

... The people who tried to recall The Ten Commandments -- and in our sample nobody could recall all of The Ten Commandments -- but those people who tried to recall The Ten Commandments, given the opportunity to cheat, did not cheat at all. It wasn't that the more religious people -- the people who remembered more of the Commandments -- cheated less, and the less religious people -- the people who couldn't remember almost any Commandments -- cheated more. The moment people thought about trying to recall The Ten Commandments, they stopped cheating. In fact, even when we gave self-declared atheists the task of swearing on the Bible and we give them a chance to cheat, they didn't cheat at all.

Now, Ten Commandments is something that is hard to bring into the education system, so we said, "Why don't we get people to sign the honor code?" So, we got people to sign, "I understand that this short survey falls under the MIT Honor Code." Then they shredded it. No cheating whatsoever. And this is particularly interesting, because MIT doesn't have an honor code. So, all this was about decreasing the fudge factor...

I walked around MIT and I distributed six-packs of Cokes in the refrigerators -- these were common refrigerators for the undergrads. And I came back to measure what we technically call the half-lifetime of Coke -- how long does it last in the refrigerators? As you can expect it doesn't last very long. People take it. In contrast, I took a plate with six one-dollar bills, and I left those plates in the same refrigerators. No bill ever disappeared.

... Think about the following intuition. How bad would you feel about taking a pencil from work home, compared to how bad would you feel about taking 10 cents from a petty cash box? These things feel very differently. Would being a step removed from cash for a few seconds by being paid by token make a difference? Our subjects doubled their cheating. I'll tell you what I think about this and the stock market in a minute. But this did not solve the big problem I had with Enron yet, because in Enron, there's also a social element. People see each other behaving.

... All of the subjects sitting in the experiment were Carnegie Mellon students. When the actor who was getting up was a Carnegie Mellon student -- he was actually a Carnegie Mellon student -- but he was a part of their group, cheating went up. But when he actually had a University of Pittsburgh sweatshirt, cheating went down.

... So, what have we learned from this about cheating? We've learned that a lot of people can cheat. They cheat just by a little bit. When we remind people about their morality, they cheat less. When we get bigger distance from cheating, from the object of money, for example, people cheat more. And when we see cheating around us, particularly if it's a part of our in-group, cheating goes up.

Now, if we think about this in terms of the stock market, think about what happens. What happens in a situation when you create something where you pay people a lot of money to see reality in a slightly distorted way? Would they not be able to see it this way? Of course they would. What happen when you do other things, like you remove things from money? You call them stock, or stock options, derivatives, mortgage-backed securities. Could it be that with those more distant things, it's not a token for one second, it's something that is many steps removed from money for a much longer time -- could it be that people will cheat even more?...

I want to tell you something about behavioral economics. We have many intuitions in our life, and the point is that many of these intuitions are wrong. The question is, are we going to test those intuitions?"
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