New York Yankees pitcher Andy Pettitte is famous not only for his phenomenal left arm, but also for his rock-solid integrity. So when he confessed in December 2007 to illegally using human growth hormone following an elbow injury, Dolly Chugh, an assistant professor at New York University’s Stern School of Business, listened closely.
“I felt an obligation to get back to my team as soon as possible,” Pettitte explained in a statement. “I wasn’t looking for an edge; I was looking to heal.”
What Pettitte revealed in his statement Chugh captures in the laboratory: People are more likely to bend their ethics to avoid a loss—such as letting down their teammates—than to attain a gain—such as extra muscle and the competitive edge that comes with it. Indeed, in a recent series of studies, when Chugh and her coauthor framed identical situations as either a cause for loss or an opportunity for gain, more participants lied and cheated in the former situation than in the latter one.
In a laboratory experiment, for example, the researchers cast undergraduates in the role of an entrepreneur who wants to buy a business from a competitor with unknown intentions. Half of the participants learned that they had a 25 percent chance of gaining the acquisition (the gain-frame condition), and the other half learned that they had a 75 percent chance of losing the acquisition (the loss-frame condition). Although their odds of success were identical, participants in the loss-frame condition were more willing to seek insider information about the competitor’s business than were participants in the gain-frame condition. Similarly, in a negotiation game, MBA students who read that they had a 75 percent chance of losing a deal told more lies and made more false promises than did MBA students who read that they had a 25 percent chance of gaining a deal.
To explain these findings, Chugh and coauthor Mary C. Kern, an assistant professor at Baruch College’s Zicklin School of Business, draw on the Nobel Prize-winning work of Princeton University psychologist Daniel Kahneman. With the late Stanford psychologist Amos Tversky, Kahneman developed prospect theory to capture the fact that in the mind’s eye, losses often loom larger than gains. Likewise, although “greed and the desire to get ahead can lead people to do bad things, fear of doing worse than before, or worse than others, may more often cause people to take the low road,” says Chugh.
Because loss-frames and gainframes are matters of perception, not reality, “we don’t have to be in a bad economy to see more unethical behavior,” says Chugh. At the same time, however, the economy does not have to improve to make people more scrupulous. “To protect yourself from deception, try to figure out how the other person is seeing the situation,” she says, and then make sure that he or she does not feel cornered. “Remember that you contribute to how others view the situation.”
Read more stories by Alana Conner.