Book of the Week: The Honest Truth About Dishonesty

09 Jul 2015

The (Honest) Truth About Dishonesty is Dan Ariely’s third book. His first book was Predictably Irrational. Most of the conclusions in the book are from studies of college students that used a math problem where cheating was possible, because the evidence of your answers are destroyed at the end of the test. It is amazing how much information you can gain by using the same experiment over and over again with small variations. Although I believe the conclusions, it still bugs me that the data is based on college studies under manufactured situations that may or may not reflect reality. There’s a chapter how on depleting your willpower will make you dishonest. If you want to know more about willpower, there’s a book called Willpower that I read a while ago. I also learned that thinking you’re wearing fake designer products will make you more dishonest. Turns out it was easier to get a fashion expert to send Dan $47k in handbags and sunglasses than going out and buying knock-offs. This book makes you about how you interact with people and how things like Bernie Madoff, Goldman Sachs and Enron occur besides people being greedy bastards. Simple Model of Rational Crime The Simple Model of Rational Crime (SMORC) has three elements

• The benefit that one stands to gain from the crime
• The probability of getting caught
• The expected punishment if one is caught.

A rational person would take these three into account to determine if they should commit a crime or not. If people behave rationally, then we should see a lot more crime since the probabilities of being caught are usually low. All those take a penny and leave a penny would be empty, because everyone would just take. Why isn’t there more crime? Why aren’t people more rational? Fudge Factor Theory

Essentially we cheat up to the level that allows us to retain our self-image as reasonable honest individuals.

There are two motivations at work. We want to view ourselves as honest, but we also want the benefits that come with cheating. The book is about how these two interplay. Fudge factor theory is how we rationalize things that allows us to maintain an honest self-image while reaping the gains of cheating. What the Hell Effect A good example of the what the hell effect is dieting. Once you break your diet, all hell breaks lose and you eat everything in sight. Since you already broke your diet, there’s no point in holding back. You tell yourself you’ll start again fresh tomorrow. This is the what the hell effect. The Hidden Cost of Favors

One other common cause of conflicts of interest is our inherent inclination to return favors. We humans are deeply social creatures, so when someone lends us a hand in some way or presents us with a gift, we tend to feel indebted. That feeling can in turn color our view, making us more inclined to try to help that person in the future.

Favors cause big conflicts of interest. Big Pharma tries to get doctors to prescribe their drugs with attractive sales reps, asking doctors to give lectures about drugs and gifts. If I’m giving a lecture about a drug, it must be good, since I’m giving a lecture. Lawyers also try to steer their expert witnesses in trials. They start agreeing with the lawyer’s point of view about things. People still think they are being objective despite these favors. You would think by disclosing these connections would allow people to make better decisions, but disclosure made things worse, because people did not correct for disclosure enough when making decisions. Self-deception and Creativity

The first principle is that you must not fool yourself — and you are the easiest person to fool. - Richard Feynman

The more creative a person, the more dishonest, because they can be more creative in their justifications for cheating. Intelligence is not correlated with dishonesty, but creativity is. Lessons in Collaborative Cheating

• When we are working with a distant and unknown partner who might benefit from our cheating, we are more likely to cheat than if were cheating only for ourselves
• If we are working with a monitor who doesn’t talk to us, we are unlikely to cheat
• If we are working with a monitor with whom we are becoming friendly, we are more likely to cheat than I f were cheating for a person we don’t know that well.

Collaboration leads to more cheating. Get a bunch of people together and they all become a bunch of cheaters like Goldman Sachs, Enron, etc. It is the social aspect that causes people to run amok. Summary Here’s a diagram from the book that shows you which things can decrease dishonesty and which things will increase dishonesty. Everybody’s a liar and a cheat, but know we now why. Purchase The Honest Truth About Dishonesty on Amazon.com or check it out from your local library.