Define unethical behaviour

unethical behavior in the workplace ppt and advantages of business ethics ppt
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Prof.KristianHardy,Austria,Teacher
Published Date:26-07-2017
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Experimental Economics Lecture 7: Unethical Behavior Dorothea Kübler Summer term 2017 1 Deception/Lying Corruption Theft Tax Evasion Unethical Behavior • Unethical behavior is widespread: – Tax evasion, Theft, Corruption, Deception. – Fraud, Embezzlement, Abuse of Power, etc. – „Going against the rules of society or a profession“. • Unethical behavior is costly to society and unfair: – Erosion of social norms, trust, etc. – Can lead to greater inequality – Can lead to suboptimal decisions – Can lead to distortion, efficiency losses. Becker (1974): Crime and Punishment • Seminal paper for economic analysis of unethical behavior. • People will behave unethically whenever the benefits outweigh the costs: – Benefit: e.g., money, time, status, effort. – Cost: probability of getting caught and punished multiplied by the value of the punishment. Rational Unethicality: Tax Evasion Rational Unethicality: Tax Evasion Should I evade my taxes this year? Rational Unethicality: Tax Evasion Being a hard working gentleman, not paying taxes would give me 50000 €... Rational Unethicality: Tax Evasion But if I get caught, I have to pay a fine of 140000 € Rational Unethicality: Tax Evasion But if I get caught, I have to pay a fine of 140000 € Though I think there is less than 10% chance I get caught. Why not behave unethically? Since Benefits of 50000 €... Costs 0.1140000=14000 €, go go tax evasion Why not behave unethically? • In practice, there is often only a very small chance of getting caught (and punished) for committing an unethical act. – Auditing probability for taxes quite low. – Corrupt public officials rarely discovered, and even less rarely punished (depending on the country). • Large benefits, small (expected) costs... • Yet nevertheless many people choose not to behave unethically... Why so? Self-Image Concerns • People care about self-image as a „moral“ person. – People want to feel good about themselves (e.g., Akerlof/Kranton, 2000; Bénabou/Tirole, 2006). • Unethical behavior decreases self-image. – Don‘t feel good about yourself anymore. Self-Image Concerns I know that 50000 € 0.1140000 €, so tax evasion makes financial sense... Self-Image Concerns I know that 50000 € 0.1140000 €, so But then I’ll be no tax evasion makes better than this guy financial sense... Self-Image Concerns • People care about self-image as a „moral“ person. – People want to feel good about themselves (e.g., Akerlof/Kranton, 2000; Bénabou/Tirole, 2006). • Unethical behavior decreases self-image. – Don‘t feel good about yourself anymore. • There is a conflict between: – Maximizing income by behaving unethically – Maximizing self-image by not doing so. • Behave unethically if expected incomeself-image costs. Self-Serving Bias and Self-Deception • There is a conflict between: – Maximizing income by behaving unethically – Maximizing self-image by not doing so. • But conflict can be avoided – If people can convince themselves that their behavior is ethical. Self-Deception I don’t want to be unethical, since I don’t want to be like this guy:

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