activity-1-introduction-to-business-ethics

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There are 12 activities

Each activity (approx 200 words)

Activity 1 –
Introduction to Business Ethics

1. Introduction

Behavioral ethics is a new field drawing on behavioral
psychology, cognitive science and related fields to determine why people make
the ethical decisions, both good and bad, that they do. Much behavioral ethics
research addresses the question of why good people do bad things.

Behavioral ethics may be the next big thing” in ethics education. N.Y.U. recently asked Prof. Jonathan
Haidt, whose research is a major part of the new learning in behavioral ethics,
to create a behavioral ethics course there. And John Walsh, who helped create
the Office of Compliance Inspections and Examinations at the SEC, recently
wrote in Corporate Counsel that the “ultimate promise of behavioral
ethics…is that it provides pragmatic tools that have been demonstrated to
work.

2. Task: Watch the following videos:

https://www.youtube.com/watch?v=GKaCqd6UDG4

3. Activity:

Based on the videos that you watch above, answer the
following questions

1. When asked the vast majority of people will agree with
the following two statements. Would you agree with them also?

a. I have solid, well-considered ethical beliefs that can be
altered only by reasoned arguments or new evidence.

b. I have character and integrity that will carry me though
when I face difficult moral choices.

2. Probably the strongest finding from the last decade
research in behavioral ethics is that people simultaneously think of themselves
as good people yet frequently lie and cheat (typically in a minor way). Is this
consistent with your experience? Do you agree or disagree with the following
statements from researchers in the field?

The empirical evidence seems to point to the conclusion that
we lie and cheat much more often than we care to admit. At the same time, we
strive to maintain a positive image of ourselves, and moral values are a
central component of our self-image (Francesa
Gino)

Essentially, we cheat up to the level that allows us to
retain our self-image as reasonably honest individuals (Dan Ariely)

Evolution prepared us humans to be devious, self-serving,
and only half-honest, inclined to grab the lion share of goodies without being
thrown out of the group. Homo sapiens became wired for truthfulness only to the
extent that it suited us, pleased others, and preserved our reputations. We are
willing to break rules to benefit ourselves, but only within limits we can
justify. We are good and fair, most of the time—at least in our own
minds—but that doesnt exactly make us straight shooters. Our internal cop
stops us only when we contemplated big transgressions (Mark Matousek)

3. Most empirical research indicates that religiosity is not
a significant factor in ethical behavior. Atheists and religious people tend to
say that the same actions are ethical and unethical. And while religious people
tend to give more money and time to their churches and synagogues, religious
and nonreligious people otherwise have similar profiles in terms of altruism
and volunteerism. Does this surprise you?

4. Have you known
good people to do bad things? Either personally, or you’ve heard or read about
episodes in the media?

6. If so, how would you explain their conduct?

Activity 2 – Bounded Ethicality

1. Introduction:

Economists have often modelled human decision makers as
completely rational. According to this model, rational people know their own
preferences, gather and accurately process all relevant information, and then
make rational choices that advance their own interests. However, Herbert Simon
won a Nobel Prize in economics by pointing out that people are rational, but
only boundedly so in that they seldom gather all available information, they
often do not accurately process the information that they do gather, nor do
they necessarily know what it is that will make them happy. People are
rational, but boundedly so.

If the last fifty years of psychological research has proven
anything, it’s that the situational often dominates the dispositional. That is
to say, our disposition or desire to be good people can be overwhelmed by
psychological or organizational factors that we may not even be aware of. These
factors adversely affect ethical decision making as well as economic decision
making, meaning that people are boundedly ethical as well as boundedly
rational.

The basic notion, as spelled out by Professor Ann Tenbrunsel
and her colleagues, is that systematic and predictable organizational pressures
and psychological processes cause people to engage in ethically questionable
behaviors that are inconsistent with their own preferences. Various factors
cause us to make unethical decisions that we later regret.

For example, although most of us want to act ethically, we
also wish to please authority figures. Therefore, if our boss asks us to do
something unethical, we may do it without even realizing our mistake because we
are focusing on pleasing the boss rather than on the ethical dimensions of the
issue facing us.

To take another example we also have a natural desire to be
“part of the team” at work. Therefore, if a questionable action
advances the team’s interests, as we perceive them, we may act unethically
because, again, we are focusing upon achieving the team’s goals rather than
adhering to our own ethical standards.

Most of us want to act ethically, and are certain that we
will because we just know we’re good people. But most of us are also
overconfident regarding our own ethicality. This can lead to complacency that
causes us to make decisions containing ethical dimensions without reflecting
deeply.

We’re ethical, it’s true, but bounded so. I recommend a
little humility. Only if we truly commit ourselves to being ethical people and
diligently guard against the organizational pressures and psychological factors
that put bounds upon our ability to be so, can we possibly realize our ethical
potential.

2. Task: Watch the following videos:

https://www.youtube.com/watch?v=yDXLzz2144g

3. Activity

Based on the videos that you watch above, answer the
following questions

•Do you think that acting ethically is just a matter of
wanting to badly enough? Why or why not?

•What kinds of situational factors can you think of that might
make it difficult for a well-intentioned person to always do the right thing?

•Can you think of a time when you did not live up to your
own ethical standards? What caused you to depart from your own standards?

•Can you think of an example of a friend who acted
unethically? Or someone in the news lately? Without making excuses for them,
can you explain why they might have made bad ethical decisions even though they
are generally good people?

•Do you think it’s possible to be completely rational when
making ethical decisions? Why or why not?

Activity 3 – Conflict
of Interest

1. Introduction

Written and Narrated by Associate Professor Lamar Pierce

Incentives are pervasive in every aspect of society. People
are rewarded for taking certain actions, and not rewarded for taking others.
Workers are paid for their effort and productivity, salespeople are paid for
their sales, and small business owners are rewarded with profits for successful
ventures. So long as these incentives are well-understood by everyone, they
work reasonably well. They motivate effort, performance, and social welfare.
But sometimes, individuals have incentives that conflict with their
professional responsibilities, often in ways that are not transparent to the
public or in their own minds. These conflicts of interest produce serious
economic and social problems.

Conflicts of interest are pervasive in markets and in
society, and can motivate professionals to act in ways that violate their responsibilities
and hurt their client and employers. Doctors, for example, may face a conflict
of interest when they are paid more for some procedures than for others. Their
professional responsibility is to do what is best for a patient, but their
financial incentive is not always aligned with this responsibility. If an
oncologist profits from selling chemotherapy agents to their patients, and some
agents are more expensive than others, this conflict becomes a problem. Most
doctors would never think of profiting in ways that hurt their patients, but
some may either consciously or subconsciously.

When there are conflicts of interest, you can almost
guarantee that they will at least sometimes lead to bad outcomes. Surprisingly,
in many states, real estate agents can represent both the buyer and the seller
in a home transaction. The conflict in such transactions is clear. The agent
could never have both parties’ best interests in mind, just as an attorney
could never adequately represent both a plaintiff and defendant in civil
lawsuit. Even professors face a conflict of interest when they’re designing
courses that will be evaluated by students seeking high grades and low
workload. If the professor is ultimately promoted based on their popularity
with students, will they consider making the course a little bit easier?

The key implication is that managers and policy-makers must
constantly evaluate whether professionals and employees might face incentives
to act counter to their responsibility. Eliminating conflicts of interest is
one of the simplest and most effective ways to reduce unethical behavior. But
in order to do so, we must be willing to acknowledge that professional codes of
conduct, like those followed by doctors, lawyers, accountants, and real estate
agents, do not make people immune to these conflicts, and that these codes are
rarely a justification for ignoring the likely outcomes that conflicts of
interest create.

2. Task

– Watch the following
videos:

https://www.youtube.com/watch?v=xnRpMQvW_ow

3. Activity

Based on the videos that you watch above, answer the
following questions

•What conflicts of interest have you personally experienced
in personal or professional roles?

•If you perceive a potential conflict for yourself, what are
some ways you might ensure that this conflict doesn’t lead to unethical
behavior for you and others?

•When have others’ conflicts of interest impacted how you or
those you know were treated?

•What types of policies can or do organizations implement to
try to reduce conflicts of interest or their costs?

Activity 4 –
Confirmity Bias

1. Introduction

Written and Narrated by Professor Robert Prentice

Parents seldom accept as an excuse their child’s plea of
“Hey everyone else is doing it.” However, psychological studies
demonstrate that those same parents, and everyone else, tend to take their cues
for proper behavior in most social contexts from the actions of others. This
pressure is called the conformity bias.

Psychologist Solomon Asch found that when he asked subjects
to tell which of three lines is the same length as a fourth line, no one had
difficulty unless they were placed in group with Asch’s confederates who gave
obviously wrong answers. Under those conditions, almost all the subjects found
it very painful to give the obviously correct answer in contradiction to the
strangers’ wrong answers. In fact, most participants gave an obviously incorrect
answer at least once during the study.

This bias to conform is much greater, of course, when the
others in the group are co-employees and/or friends, or when the correct answer
is not right there in black and white – as it was in the Asch Study – but is instead
a subjective—like an ethical questions.

An employee at the accounting firm KPMG challenged the
ethics of tax shelters that the firm was selling. He received a simple e-mail
that said: “You’re either on the team or off the team.”

Well everyone wants to be on the team. We all realize that
loyalty is generally an important virtue. But it causes a pressure to conform
and this pressure to conform, it can been argued, helped cause Ford employees
to sell the Pinto despite awareness of its gas tank dangers, and helped A. H.
Robins employees to continue to sell the Dalkon Shield contraceptive IUD
despite knowing its ghastly medical consequences.

The impairment of individual decision making known as
“groupthink” – where people deciding in groups often make more
extreme decisions than any individual member initially supports – can
exacerbate the conformity bias. It can be reasonably argued that loyalty and
groupthink helped Morton Thiokol employees to remain silent about known O-ring
dangers that caused the Challenger space shuttled disaster.

Psychological and organizational pressures can cause even
people with good intentions to lie or otherwise act unethically. Good character
isn’t always sufficient. As Albus Dumbledore told Harry Potter, “It takes
a great deal of bravery to stand up to our enemies, but just as much to stand
up to our friends.”

2. Task – Watch the following videos:

https://www.youtube.com/watch?v=Gswmcc4TpxU

3. Activity:

Based on the videos that you watch above, answer the
following questions

•Can you think of a time when you
did something just because everyone else was doing it—even when it didn’t feel
quite right to you? Do you regret it now?

•It was recently observed that
“cheating is contagious.” Does that sound true to you? Why or why
not? If it is true, why might this be the case?

•Loyalty is generally considered a
good quality. When a group to which you owe loyalty seems to be making a
decision that seems unethical to you, how should you go about trying to balance
your loyalty to the group against your own ethical integrity? Have you had an
experience like that? If so, how did you resolve it?

•Can you explain how
“groupthink” works? Can you think of a time when you have been
subject to groupthink?

.

Activity 5 – Ethical
Fading

1. Introduction

Written and Narrated by Professor Robert Prentice

In the book he wrote about his crimes, disgraced lobbyist
Jack Abramoff—Casino Jack—asked: “What was I thinking?” This is a
familiar refrain among white collar criminals. Why can they see their ethical
failings in retrospect, but not earlier when it really mattered?

Part of the explanation is what professors Ann Tenbrunsel
and David Messick call ethical fading. Imagine that you work for a company in
internal audit and your boss asks you to inappropriately massage some earnings
numbers. And it happens to be the week that the company is deciding whom to lay
off in the most recent round of cutbacks. And you want to keep your job, of
course. It is possible that you will not even notice the ethical dimensions of
the action you have just been asked to take by your boss. These ethical
dimensions may just fade from view.

Ethical decisions are often made almost automatically by the
parts of our brain that process emotions. Only later do our cognitive processes
kick in. When we think we are reasoning to an ethical conclusion, often all we
are really doing is searching for rationalizations to support the decision that
we have already made instinctively.

As time distances us from the decision we have made, the
ethical issues may start to reappear. We may feel the need to reduce the
dissonance that results from the conflict of our view of ourselves as ethical
people and the unethical action we have committed. Studies show that offering
people an opportunity to wash their hands after behaving immorally are often
enough to restore their self-image. There’s a reason we talk about starting
with a “clean” slate.

Even if our minds cannot cause an ethical issue to fade from
view, a process known as moral disengagement can mitigate the sting of an
unethical decision. Moral disengagement is a process by which our brain enables
us to turn off our usual ethical standards when we feel the psychological need
to do so, just like we’d turn off a TV when a show comes on that makes us
uncomfortable.

Studies show, for example, that people who want to buy an
article of clothing that they know was manufactured with child labor will
suddenly view child labor as less of a societal problem than they thought
before. Moral disengagement allows us to suspend our personal codes of ethics,
yet continue to view ourselves as ethical people.

There is no easy cure for ethical fading and moral
disengagement. Our only option is to be vigilant in looking out for ethical
issues and equally circumspect in monitoring our own actions and
rationalizations.

2. Task – Watch the following Videos:

https://www.youtube.com/watch?v=BSHpeg1XLA0

3. Activity

Based on the videos that you watch above, answer the
following questions

•Can you explain the concept of
ethical fading and perhaps give an example of when it happened to you?

•Can you think of a situation where
you were so intent upon pleasing an authority figure, fitting in with your
friends, or achieving a goal that you failed to give an ethical issue your full
attention? Did that situation cause you regret?

•Can you think of an example of a
friend who might have been the victim of ethical fading? Or a person in the
news recently?

 

.

Activity 6 – Framing

1. Introduction

Written and Narrated by Professor Robert Prentice

In any kind of decision-making, context counts. The simple
reframing of a situation or question can produce a totally different answer
from the same person. For example, people would rather buy a hamburger made of
meat labeled 75% fat free than meat labeled 25% fat. In fact, when questioned,
these people will tell you that the 75% fat-free burger tastes better than the
25% fat burger, even though the burgers are identical.

When NASA was deciding whether to launch the ill-fated space
shuttle Challenger, Morton Thiokol’s engineers at first opposed the launch on
safety grounds. But when their general manager instructed the engineers to
“put on their management hats,” he reframed the decision from one
focusing on safety to one focusing on dollars and cents. The engineers then
unfortunately changed their decision.

We need to look beyond the obvious frame of reference in
business – “will this be a profitable decision?” – and consider our
actions from a broader perspective like “how will this look when it’s
reported on the front page of the newspaper?”

Decisions made by business people often occur in a context
where subjective factors predominate, and the framing of an issue is
particularly influential. In Enron’s declining days, the company attempted to
save money by encouraging employees to minimize travel expenses. An Enron
employee later wrote that he intentionally flouted the new policy. While this
seems like a clear ethical lapse, in the employee’s mind, he deserved to stay
in the most expensive hotels and to eat at the best restaurants because of how
very hard he was working. He framed the issue in terms of his narrow
self-serving interests, not in the broader ethical context of adhering to company
policy.

CFOs and accounting personnel at Enron, HealthSouth, and
other scandal-ridden companies didn’t need a philosophy course to help them
figure out that their manipulation of financial statements was unethical. Their
problem was that at the time of their actions, their frame of reference was
loyalty to the company and to the company’s goal of maximizing stock price. Had
those employees been able to think in terms of the bigger ethical picture – for
example, the impact of their actions on other people’s pension funds – they
might have acted differently.

2. Task – Watch the following Video

http://ethicsunwrapped.utexas.edu/video/framing

3. Activities:

•Studies show that people primed to
think about business profits will make different choices than people facing the
same decision who have been primed to think about acting ethically. Can you
explain how that might affect you in your work life

•Can you think of a situation where
you made a decision that you regret and probably would have chosen differently
had you looked at the choice in a different way?

•How do politicians and advertisers
use framing to channel people’s decision?

•How might framing adversely affect
your ethical decision making in your projected workplace?

•How can you work to ensure that
ethical considerations stay in your frame of reference when you make decisions
in your career and your life?

.

Activity 8 – Fundamental Moral Unit

1. Introduction

Written and Narrated by Professor Deni Elliott

There are so many considerations in making ethical
decisions, but what consideration is most important? Different cultures and
ethical systems have produced theories that favor one consideration over
others. The consideration that a theory favors is called a Fundamental Moral
Unit, or FMU.

Many of the classical Western philosophers from the Greek
and roman traditions favor the individual as the Fundamental Moral Unit. In
these theories, the primary dictate is a negative statement: Don’t get in an
individual’s way in his or her pursuit of the good life.

Feminist theories tend to determine the best choice based on
how well those choices strengthen the connections among people and how well the
needs of the most vulnerable are addressed. The fundamental moral unit here is
relationship between people and is based on the belief that care should be
given to those who can’t take care of themselves.

Some Eastern theories promote the overall good of the
community first and foremost. And some indigenous theories stress human’s
connection with the world as a whole, with all natural systems and species
having an equal right to co-exist. People who grow up in these traditions
expect that they and others will sacrifice individual self-interest for the
good of the group and the environment. The Fundamental Moral Unit here is
called “aggregate good.”

Let’s consider a decision you might encounter if you were a
member of your local city council. There is a 50 acre parcel of land in your
city’s jurisdiction that was designated a hundred years ago to remain open
space. Now the area contains some ancient Native burial grounds, but the tribe
members a hundred years and tribe members today are happy with the designated
use as long as the woodlands around the burial mounds stay intact. A developer
would like to build a shopping mall there. As a city council member, you get to
decide how that land will be used today: should it remain a park or become a
shopping mall?

If you make your choice based only on the good that comes to
individuals, you might be tempted to go with the shopping mall. The mall will
provide jobs for many of the people in the community who are out of work and
the additional income from the taxes from the new property owner and the
businesses will allow the city to reduce taxes for individual home owners.

Which choice best advances the overall good of the community
in which I live? The policy choice made previously to protect the land respected
human connections to natural systems and was sensitive to the culture and
history of a minority group. Affirming that decision helps all people in the
community maintain trust in government.

We can see how the teachings from all of these traditions
can help us in analyzing an important choice. And they can help us answer one
more question: Can I find a choice that doesn’t cause harm to anyone or
anything? If a shopping mall is a good idea for the community, alternative
building sites that don’t cause harm are waiting to be found.

2. Task – Watch the following videos:

https://www.youtube.com/watch?v=7-OBYIyh-NU

3. Activity:

Western philosophy identifies the individual as the FMU;
feminist theories tend to use relationship and maintaining the connections among
people; Eastern and indigenous theories put natural or spiritual systems as the
core to be maintained.

1. Give an example to show that you can use these different
kinds of thinking to arrive at the same or similar answers for what is morally
permitted. Show how, in some instances, the answer to what is morally permitted
would be different.

Activity 9 – Incentive Gaming

1. Introduction

Written and Narrated by Associate Professor Lamar Pierce

Organizations and institutions frequently use financial incentives
to motivate productive behavior. The majority of people dislike effort to some
degree, which forces authorities to either monitor people intensely to ensure
that they contribute, or to pay them based on their observable performance.
Salespeople are given commissions, bankers are given bonuses, and even teachers
are paid for student performance.

The problem with these incentives, of course, is that you
need to decide on which metrics to base the incentives, and then communicate
those rules to people in order to motivate their performance. You can only pay
people based on what you observe, and you can’t observe everything. Which is
why we get incentive gaming.

Incentive gaming is when people manipulate
pay-for-performance schemes in ways that increase their compensation without
benefiting the party that pays. Often referred to as “rewarding A while
hoping for B”, incentive gaming is an example of how opportunistic and
strategic people can be when there are financial rewards involved. People will
focus all their effort on those incentives that pay them the best, and will
even manipulate information to represent their performance on those dimensions
as higher than it actually is.

The financial crisis of 2008 provided several excellent
examples of incentive gaming. Some mortgage brokers, who were paid commissions
for originating mortgages, quickly learned they could earn more money if they
relaxed the credit requirements for homebuyers. They were compensated based on
originating a loan, not on whether that loan defaulted in subsequent years, a
costly outcome for the bank and homeowner. The incentives designed to motivate
effort and entrepreneurial behavior also motivate people to increase their
earnings in ways that hurt both their customers and market efficiency.

Examples of incentive gaming are everywhere. When teachers
are paid based on the standardized test performance of their students, they
focus much of their effort on teaching to the test and hurt student education.
When salespeople are given bonuses for reaching monthly sales targets, they
offer customers unnecessary discounts to buy now rather than later. When
workers are paid based on their relative rankings, they may focus their effort
on sabotaging their coworker instead of improving their own performance.

The implication of incentive gaming is that managers and
policy-makers need to understand that humans are clever and opportunistic
beings. If you give them an incentive system, many of them will figure out how
to manipulate it to maximize pay and minimize effort. Designers of
incentive-based compensation systems must think carefully about unintended
consequences, putting themselves in the shoes of their employees, and ask,
“If I were given these incentives, what might I do to game them?”

2. Task – Watch the following video:

https://www.youtube.com/watch?v=Rt2PnDh_WzI

3. Activity:

1. When have you been paid based on your performance, and
how did this alter the way you approached your job (for the better and for the
worse)?

2. Grades are partly intended to provide incentives for
quality work. How do students strategically game grading systems in ways that
might pervert this intent?

3. Is gaming unethical, or is it just rationally responding
to the incentive system? Whose responsibility is it to stop gaming: the person
who designs the incentive system, or the person who exploits it?

4. How do you draw the line between gaming and cheating?

.

Activity 10 –
Instrumentalism

.

1. Task – Watch the following video:

https://www.youtube.com/watch?v=WU6J5E9Vzz8

2. Activity:

1. Psychologist Dan Ariely says that “the first
dishonest act is the most important one to prevent.” Why does he say that?
Do you agree?

2. Can you think of a situation where you were a victim of
the slippery slope phenomenon?

3. Have you seen a friend or read about someone in the
newspaper who started cutting little corners and was soon in big trouble?

4. Cynthia Cooper, whistleblower of the infamous WorldCom
financial fraud, wrote: “People don’t wake up and say, ‘I think I’ll
become a criminal today.’ Instead, it’s often a slippery slope and we lose our
footing one step at a time.” Do you agree? Why or why not?

5. What can people do to prevent a mistake from snowballing
down the slippery slope?

Activity 11 – Loss
Aversion

1. Introduction:

The objective of this video is to introduce students to the
concept of loss aversion so that they can realize how it is one of a series of
psychological forces that can cause them to act unethically, almost without
realizing it. It is a phenomenon that must be guarded against.

People can relate to the notion that loss aversion has an
impact on tax cheating. People will cheat more to avoid a loss than to secure a
gain. So, if they have over-withheld, they are less likely to cheat in order to
obtain a larger tax refund (which they view as a gain) than they are to cheat
if they have under-withheld and are trying to avoid making a tax payment (which
they view as a loss).

The two key things about loss aversion are that people hate
losses more than they enjoy gains and that they will take risks (including
unethical actions) to avoid losses that they would not take to secure gains.
Students can usually grasp this idea and relate to it in their everyday lives.
A student is more likely to cheat to avoid flunking out of school (a loss) than
to move from a B to an A (a gain), unless she has a 4.0 GPA and views the
potential B as a loss. In one experiment, subjects were more likely to be in
favor of gathering “insider information” and more likely to lie in a
negotiation if facing a loss rather than a potential gain. In real life, loss

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