I’m a big fan of game theory, especially when looking at strategic or ethical questions. By stripping away extraneous information and formalizing interactions among actors, interesting and sometimes surprising consequences emerge. I find this particularly interesting when looking a possible responses by competitors to my clients’ strategic initiatives. Lately, though, I’ve been thinking about what actual games can tell us about how people view themselves, others, and third parties in the context of business ethics. My experience of refereeing soccer matches has led me to conclude that there are some substantial barriers to effective ethical decision making that need to be taken into account when designing systems to increase the likelihood of ethical behaviour.
For the past several years, in addition to coaching my kids’ teams and playing the occasional match myself, my son and I have traveled throughout our area as hired referees for leagues and tournaments. Since my son is young we usually work with younger players (U12 and under) but I’ve occasionally worked up through the adult leagues. It’s a difficult job that requires a knowledge of the game as well as quick reflexes, a degree of fitness, and a thick skin. Over the years, I noticed what can only be called a failure in perception on the part of coaches, parents, and players. It is simply this: no one ever thinks the referee is biased toward their team. Of the 100+ matches I’ve been the centre ref for, in perhaps half of them I’ve been accused by both sides of being biased against them. Now this might be just a thing that soccer parents and coaches say, but if it is something these people believe (and I think they do) I think it tells us something important about human nature which has important consequences for how we teach people about business ethics.
If you look at this issue formally, we’d say that for every match, there are three possible cases regarding the referee’s bias: he/she is unbiased, biased for the home team, or biased toward the away team. Leaving aside the fact that no referee I know cares at all who wins the matches they officiate, if we allow for the possibility of referee bias we have only those possibilities. To be biased against both teams would be nonsensical. Therefore, if the perception of the fans is accurate (and assuming a random, symmetrical distribution of bias), on average you would find that of the times when fans thought the referee was biased, half the time it would be against your team, half the time against the other team. And yet anyone who spends any time around soccer (and I’m assuming other sports) knows that this is not true. As above, almost no one ever says “boy, that referee was certainly biased in favour of our team”.
It might be tempting to write this off as something that is purely the domain of recreational supporters of sports teams, but I don’t believe it is. I think it tells us something very important about the way people view the members of their in-groups (in this case, members of the team they support) and how they privilege those members with an assumption of moral superiority. People imagine or assume that people belonging to their in-group (whether it is a sports team, company, church, etc.) have good intentions and that any transgressions are the result of a mistake, a misinterpretation, or ignorance. Instead of judging the actions by both in-group and out-group members by the same ethical/behavioral yardstick, we adjudge the wayward actions of the other team or the other company to be the result of malice or intentional wrongdoing.
The philosopher and theologian Reinhold Niebuhr wrote about this same tendency in individuals calling it the “self-regarding instinct.” He thought it was universal and believed that it was the basis for much of what passes for institutional evil in the world. What I’m suggesting is that we often do the same thing in terms of groups we belong to and that much of what we allow in our companies that is clearly not ethical to an outsider falls under this same distortion of perception. When a fellow employee bends the rules or falls a little short in their compliance duties, because he or she is a member of our team, we are likely to see it as unintentional, unavoidable, or not his or her fault. There is a sort of “reality distortion field” around members of our own team/group/company.
I’m not suggesting that we should never understand the context of our own and other’s actions as a mitigating factor in ethical judgments. I’m actually suggesting two things: that we design systems that take this perceptual distortion into account when we are looking at our own firms and that we keep try to contextualise the behaviour of people in other firms.
I’m not naive enough to think soccer moms and dads are going to take time to reflect about how they favour their own kids’ teams and therefor give me a break when I’m officiating their matches on Saturday mornings. I do hope one day they, as a group, will become a little more balanced in their expectations (see http://www.youtube.com/watch?v=r0qGeADPzAs for more), but part of the fun is really in rooting for your team. In the business world, however, the “in-group regarding instinct” can lead to the excusing of clearly unethical behaviour in one’s firm and the assumption of guilt in others. While clearly more research needs to be done in this area (and please, if you have any references on similar research, I’d really appreciate them), just the knowledge of this perceptual shift may be enough to mitigate some of the worst of the resulting transgressions.
Capital and Conscience 