Rotman on the Passivity behind Financial Deceit: B-School Research

Doing the right thing, morally, is easiest when it’s made, well, easy for the individual concerned. The flipside is that people are more likely to cheat when it simply means overlooking something that they know to be wrong.

This is the crux of findings made by Nina Mažar, a marketing professor at Toronto's Rotman School of Management, in collaboration with colleague, Scott Hawkins.

“People tend to accept the status quo,” reasoned Mažar as she explained the results of an experiment which scrutinized people’s behavior when faced with choices involving personal financial gain. In the Rotman researcher’s experiment, participants were most likely to cheat when an incorrect answer that would give them more money was automatically supplied and, among the cheaters, subsequently ignored. Conversely, people were least likely to cheat when it meant actively changing a correct answer into one which would leave them financially better off.

It sounds pretty commonsensical but the Rotman professor believes that methods of self-reporting are missing a trick here. If, for example, you make people fill in all the boxes (or pre-fill them based on prior responses) on an online tax or insurance form - even if that value ends up being rightly written in as US$0 - the suggestion is that fewer people will accidentally ‘forget’ to declare things they ought to be declaring. The potential value here is such that Mažar has already held discussions with the Canadian revenue agency.