SM131 Exam 2

illusion of objectivity

notion that we are free of the very biases we are quick to recognize in other people,
unconscious (implicit) biases may be contrary to conscious (explicit) beliefs

4 sources of unintentional unethical decision making

1) implicit forms of prejudice
2) in-group favoritism
3) conflict of interest
4) tendency to overclaim credit

implicit forms of prejudice

emerge from unconscious beliefs, stem from fundamental mechanics of thought, associations between things

Implicit Association Test

IAT, used to study unconscious bias

in-group favoritism

bias that favors one's own group, more likely to help people you know/ are similar to you (in race, nationality, gender)

conflict of interest

bias that favors those who can benefit you

tendency to overclaim credit

bias that favors you, people constantly overestimate their value to a group, can result in destabilization and reduction of overall performance

how businesses can improve decision-making

1) Collect data
2) shape the environment
3) broaden decision-making process

System 1 thinking

thinking based on intuition/emotion, quick, effortless

System 2 thinking

thinking that is slower, more conscious, logical, structured

blind spots

our failure to notice all of the consequences, predictable/expected in ethical decision-making

motivated blindness

we see what we want to see", failure to notice others unethical behavior when it would harm you

ethical fading

ethics fade away when decisions are made for just business

mis-applied incentives

incentives can encourage unethical behavior

indirect blindness

when company/person delegates unethical conduct to someone else they tend to overlook responsibility of that company/person

slippery slope

slow erosion of ethics, minor infractions become incrementally larger

ethical issue

no clear wrong/right answer, decisions will be challenged by other people (have facts straights to defend decision)

Smell Test

aka "Publicity Rule", what decision would you make if it was going to be on the front page of the newspaper/if you had to explain it to an authority figure


-framework that focuses on the greatest good for greatest number of people
-CONSEQUENCES, not means
-places same value on everyone's happiness (ignores individual rights)


-framework that states we have certain duties/rights regardless of consequences
-categorical imperative
-MEANS, not consequences
-motivation for decision matters

categorical imperative

rule should be one that you are willing to universalize (what would happen if everyone does it?)


-"Rights Theory", fundamental individual right is LIBERTY
-redistribution of wealth (taxes)
-individual rights at expense of community

virtue ethics

-living a good life through habit (universal baseline values)
-what virtues will a decision reward
-what kind of person do you want to be


essential nature/purpose of an activity (ex: humans --> happiness)

social justice

-framework that states that ethics is about fairness and justice
-veil of ignorance
-original position
-inequality is reality
-qualified principle of inequality
-obligation of the lucky

veil of ignorance

none of us know anything about ourselves (take away all knowledge of age, gender, race, etc)

original position

if all people are equally ignorant, what are fundamental rights? (freedom of speech, assembly, religion)

qualified principle of inequality

inequality is OK if well-off people use advantage to help the least well-off

obligation of the lucky

luck is arbitrary, lucky people must help the unlucky


-Eastern framework
-moral power (te) is achieved by following your path (tao)
-stresses compassion, moderation, humility


-Eastern framework
-respect and politeness to others
-honor family
-improve through practice (altruism & humanity)
-in business, mutual obligation connects people

Peter Drucker

-believes personal ethics = business ethics
-no such thing as business ethics, individual behavior rules apply to business
-purpose of business= find/value customer, shareholders will follow


idea that a leader must sacrifice personal beliefs for what's best for company, old business ethics idea


-highly visible people feel the need to lead by example
-can become obsessed with appearance and manipulation of appearance, only motivated by authority


-ethics centered on individuals
-same rules for everyone (regardless of position)
-sincerity based on 5 mutual obligations/relationships

Interdependence- 5 Relationships

1) master-servant
2) parent-chid
3) spouse
4) sibilings
5) friends

business purpose

create customers, take care of customers, shareholders will follow (Drucker)

Albert Carr

-personal ethics DOES NOT = business ethics
-no one in business expects the truth, pressure to deceive
-business is like POKER
-decisions must be legal and make a profit
-all ethics are self-serving

pride and money

key components that lead people to lose sight of ethics in business, "trappings of success

insider trading

illegal trading stock using material, non-public information (Waksal's conviction)

tipper liability

if a person is given information they know is confidential and uses information, expects personal gain from information

tippee liability

if a person gives away information they know is confidential, expects personal gain from telling information

obstruction of justice

lying to law enforcement, hiding or destroying evidence (Stewart's conviction)