Ethics in The Real World Toby Groves Ph

Ethics in The Real World Alice Stewart - Epidemiologist

Ethics in The Real World Ethics are supported by an attitude of: • Openness • Willingness to be wrong • Exploring biases and assumptions • Accepting, even seeking criticism • Preferring to figure out problems on your own so you really understand themnot handed the answer • Analyzing your errors in judgment • Instead of excuses, curiosity about what biases or other errors may have resulted in the incorrect judgment

“I can learn anything I set my mind to” “I’m either good at something or I’m not” “Every failure is an opportunity to grow” “A failure is an indictment of who I am as a person” “My abilities grow as I challenge myself” “My abilities are fixed and challenges are a threat” “I like to stretch myself” “Feedback is constructive” “I’m curious and stay on problems until they're solved" “I stick to what I know” “Feedback is a personal attack” “I become frustrated easily and give up quickly”

What is Ethics? Let’s start with what it’s not Whatever society accepts- If this were true, you could take a poll and you would believe whatever the result is Not science- Science deals with how people “ought to act”, not considering biases, psychology, or emotions Not the law- Laws can deviate from what is ethical, and rules have a counterintuitive effect on ethical thought processes. Intuition- We may have formed habits in thinking that bias us and that are not ethical. Familiar habits trigger dopamine. Copyright Toby Groves, Ph. D. All Rights Reserved

Understanding the important role empathy plays in critical thinking A type of critical thinking-a continuous effort to understand develop one’s own reasoning and standards Well founded standards of fairness and of right and wrong Understanding our own ethical reasoning processes, thinking critically about these processes, and seeking to understand our unique biases Copyright Toby Groves, Ph. D. All Rights Reserved What is Ethics?

Need for Certainty • We subconsciously assign tremendous weight to our assumed outcomes and automatic character assessments • • This assessment causes profound biases our perceptions Colors our judgment Results in automatic assumptions and predictions Causes subliminal susceptibility to seek subliminal information

Economic Theory of Expected Utility: • Assumes we will follow a logical process in making our choices, weighing the expected gain and potential losses. If it’s about an ethical choice (deciding to do something risky), theory predicts we would weigh the expected gain from our choices against the likelihood of getting caught and severity of punishment.

Cheating Research 30, 000 test takers 18, 000 cheat a little 12 cheat a lot Cheat a little Test Takers Amount Stolen The 18, 000 “little” cheaters stole $36, 000 The 12 “BIG” cheaters stole $150 No cheating Cheat a lot $36, 000 $150

Rules-Based Thinking We may not recognize the ethical component of a problem • A rules based frame of thinking causes us to focus on the rules, not how our decisions affect others. We tend to focus on the letter of a rule rather than the spirit Copyright Toby Groves, Ph. D. All Rights Reserved

Spurs automatic responses to “recognized” patterns Rules Based Thinking Does not address: • How situational assessment is accomplished in new or changing circumstances • How to deal with conflicting or unreliable data • How to change your mind • In unusual circumstances, our recognitional process needs to be supplemented by using Narrows our thinking to specific and narrowly applicable rules and patterns Entails simple recognition of the situation and retrieving a typical response Copyright Toby Groves, Ph. D. All Rights Reserved

Algorithms are rules based Rules-Based Processes and Empathy • Tendency to focus on the letter of the rule rather than the spirit • Rules are emotionally distancing • We become self-focused which lessens empathya key factor in ethics Machine learning, robotic processing and AI • Lead to feelings of lack of control and autonomy leading to complacency and disengagement • Psychological distancing • Diffusion of responsibility Copyright Toby Groves, Ph. D. All Rights Reserved

An emotional need to search for level of certainty that may not exist We subconsciously assign tremendous weight to our assumed outcomes and automatic character assessments This assessment causes profound biases our perceptions Results in automatic assumptions and predictions Causes susceptibility to seek information that eases conflict Need for Certainty Copyright Toby Groves, Ph. D. All Rights Reserved

Types of Empathy • Cognitive Empathy • The ability to see the world through another persons eyes • A sense of how another persons thinking works and what matters most • Curiosity driven • Empathic Concern • This is a heart to heart connection • When a leader let’s people know he/she will support them • When people are able to take risks and express their opinion rather than maintain a “too safe” defensive posture. • Emotional Empathy • The ability to feel what another person feels • through tuning in to a stream of facial, vocal and other non-verbal signs-which is 85% of the impact of communication • Voice tone, facial expressions, noticing a wince or jaw tightening Copyright Toby Groves, Ph. D. All Rights Reserved

Ethics and Critical Thinking • Critical thinking skills allow us to: • Understand connections between ideas and concepts • Construct and evaluate arguments • See inconsistencies and gaps in reasoning • Assess the relevance of ideas • Examine the justification of your own beliefs

What is Critical Thinking? • Logic- Normative theory of how one should reason. Formal logic. • Mathematics/computer science • Hard answers-precisely defined operations • Not descriptive theory of how humans actually reason • Does not generally consider psychology • Critical Thinking- Everyday, real life reasoning. • Using creativity • Deals with psychology. Beliefs and recognizing biases • Gray areas, complex, unclear and changing situations • Reflective and independent thinking

Choice Complexity and Professional Judgment • Study on bias in professional decision-making using Doctors • Decision to send patient-a 67 year old farmer for hip replacement surgery • First group of doctors told they forgot to try one drug-Ibuprofen. Would they call patient back from surgery to try the drug? 50% said pull then back • Second group of doctors told they forgot two drugs-Ibuprofen & Piroxicam. Would they call patient back from surgery? 72% let patient go on to surgery • Why? Choice complexity increases chance of going with default option

Neurotransmitters: Seeking versus avoidance circuitry Short Term • Dopamine- Pleasure. Powerful addictive quality. The feeling provided by decision tools that you have found what you are looking for. Not produced through distant goals. • Cortisol-Anxiety - fight/flight/freeze. Powerful, fast and contagious. Makes us self-focused, kills working memory and concentration. Prolonged/repeated exposure is damaging. powerful influence on behavior Long Term • Serotonin- Safety, self respect, pride and confidence. Takes time to build. • Oxytocin-Trust and belonging. Boosts creativity and problemsolving abilities. Takes time to build.

“Rules based thinking” type • Spurs automatic responses to “recognized” patterns • Narrows our thinking to specific and narrowly applicable rules and patterns • Entails simple recognition of the situation and retrieving a typical response Ethics in The Real World • Does not address: • How situational assessment is accomplished in new or changing circumstances • How to deal with conflicting or unreliable data • How to change your mind • In unusual circumstances, our recognitional process needs to be supplemented by using “Attentional Control” • We do this by shifting our attention from simply reading the cues in a situation • to recognizing our automatic assumptions about the conclusion… • Use “As-If” reasoning by developing hypothetical or counterfactual ideas • Imagine that the possibility is true and pose queries about what would happen

Neuroscience and Ethical Decision. Making 1 2 3 Instead of a conscious reasoning process to arrive at a judgment Usually have immediate and subconscious intuition Followed by conscious reasoning to support that intuition Copyright Toby Groves, Ph. D. All Rights Reserved

The Trolley Problem Copyright Toby Groves, Ph. D. All Rights Reserved

Psychopathy • Historically diagnosed as “Anti-social Personality Disorder” • Psychopathology-Science of disease of the human mind • A Psychopathic Personality is known by the following traits: • Amoral and anti-social behavior • Inability to develop meaningful/lasting relationships • Extreme egocentricity • Absence of empathy “Emotionally Deaf” • Moral decision making elicits different neural responses in psychopathic individuals • Most accepted test for Psychopathy is the Psychopathy Checklist (Dr. Robert Hare)

Our views are resistant to change because of the way we interpret subsequent information The Bias of our Initial Assumptions When new information meets prior belief, contrary evidence is dismissed as unreliable, or unrepresentative We must also realize that when no initial view is present, the opposite situation can occur-we are at the mercy of the way the problem was formulated Copyright Toby Groves, Ph. D. All Rights Reserved

Framing example Imagine that the U. S. is preparing for the outbreak of an unusual foreign disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimate of the consequences of the program are as follows: Copyright Toby Groves, Ph. D. All Rights Reserved

Framing example • If program A is adopted, 200 people will be saved. • If program B is adopted, there is a 1/3 rd probability that 600 people will be saved, and a 2/3 rds probability that no people will be saved Would you choose program A or B? Copyright Toby Groves, Ph. D. All Rights Reserved

Framing example • If program C is adopted, 400 people will die. • If program D is adopted, there is a 1/3 rd probability that nobody will die, and a 2/3 rds probability that 600 people will die Would you choose program C or D? Copyright Toby Groves, Ph. D. All Rights Reserved

• If program A is adopted, 200 people will be saved. • If program B is adopted, there is a 1/3 rd probability that 600 people will be saved, and a 2/3 rds probability that no people will be saved. Framing example • If program C is adopted, 400 people will die. • If program D is adopted, there is a 1/3 rd probability that nobody will die, and a 2/3 rds probability that 600 people will die. Programs A and C and B and D are the same but framed in “live” or “die” Copyright Toby Groves, Ph. D. All Rights Reserved

Principles vs. Rules Based Standards-Research • CFO’s less likely to make aggressive accounting choices under “Principles” based system (Agoglia, 2009) • CFO’s came to more similar conclusions under principles than rules based system U. S. accounting standards have become so precise as to invite opportunistic interpretation by corporate executives Copyright Toby Groves, Ph. D. All Rights Reserved

Neurocriminology • Significant findings • Amygdala 18% smaller in group considered psychopaths • Believed to be genetic susceptibility coupled with environmental triggers • Monoamine Oxidase A (Enzyme) combined with early child abuse associated with smaller amygdala volume (emotional center of brain) • Brain plasticity • Early development can have profound influences on brain activity

Psychopathy • Not a diagnosable mental disorder per the American Psychiatric Association • Psychopathology-Science of disease of the human mind • A Psychopathic Personality is known by the following traits: • Amoral and anti-social behavior • Inability to develop meaningful/lasting relationships • Extreme egocentricity • Absence of empathy “Emotionally Deaf” • Moral decision making elicits different neural responses in psychopathic individuals • Most accepted test for Psychopathy is the Psychopathy Checklist (Dr. Robert Hare)

GROUP ACCURACY RATE (%) College students 52. 82 CIA, FBI, and military 55. 67 Police investigators 55. 79 Trial judges 56. 73 Psychiatrists 57. 61 U. S. Secret Service agents 64. 12* Distinguishing Truth from Deception

Stability of Moral Position • Study: “Large scale governmental surveillance of e-mail and internet traffic ought to be forbidden as a means to combat international crime and terrorism”

Stability of Moral Position • Study: “Large scale governmental surveillance of e-mail and internet traffic ought to be permitted as a means to combat international crime and terrorism”

Behavioral Profiling • FBI Behavioral Analysis Unit (BAU)/ White Collar Crime • Focus on: • Developing behavioral profiles based by comparing details of the crime with behavioral details of the offender • “investigation phase” –after a crime has occurred • Recognition of people likely to cooperate/act as informants • Conflicting assessments as to effectiveness

Behavioral Profiling • Why not use profiling before a crime occurs? • FBI uses known data from a crime to draw correlations with past events and infer characteristics • This is much different than inferring data for a crime that hasn’t occurred and for which details are unavailable • Even for experts, predicting behavior is statistically little better than chance

Sticky First Impressions Trait being judged . 10 sec 1 sec Trustworthy . 73 . 74 Competent . 52 . 59 Aggressive . 52 . 59 Likable . 59 . 63

Distinguishing Truth from Deception Group Accuracy Rate (%) College students 52. 82 CIA, FBI, and military 55. 67 Police investigators 55. 79 Trial judges 56. 73 Psychiatrists 57. 61 U. S. Secret Service agents 64. 12*

9 8 7 6 Attribution Error • A cognitive bias of over emphasizing personality characteristics and underemphasizing situational awareness. 5 4 3 2 1 0 Industry Red Flags Financial Statement Character Assessment Red Flags Study: Auditor Prioritization

• Confirmation Bias- The tendency of people to favor information that confirms their beliefs or hypotheses. Studies show we tend to seek information that confirms rather than properly tests the validity of what we are told How did we miss it? • Selective Perception-A cognitive bias wherein individuals are subconsciously attracted to stimuli that falls in their range of reasonable expectation and are oblivious to other stimuli. • Belief Perseverance- Our tendency to seek information that is consistent with our preexisting beliefs. • Biased Processing of Disconfirming Information- The subconscious bias towards being more critical of evidence that disconfirms our initial beliefs than evidence that confirms it.

Pattern Seeking and Professional Skepticism Two types of errors in pattern seeking • Type I-False Positive- Finding a pattern that doesn’t exist • Type II-False Negative- Failing to detect a pattern that exists Signal to noise ratio (Attractors) • Too low- Miss obvious patterns • Too high- See false patterns everywhere What causes pattern detection errors? • Tradeoff between Type I and Type II errors The more evidence you require to prove that something is true, the more likely you are to still believe it is false when it is true (false negative). The opposite also applies- you could believe something too quickly.

Critical Thinking-Ethics Case Studies • Automatically decide what information is important • Does not teach us prioritization/sampling • Lacks distracting information that occurs in real life situations • Does not include social pressures • Primed to look for a problem, unlike in real life • Actual cases in progress are an alternative to standard academic case studies • Research into case studies used for ethics training resulted in less ethical decisions from students-reason suggested was they were jaded by the many stories of ethical wrongdoing

Group Psychology The Science Behind Collusion • The overwhelming power of belonging • “Need to belong”-Affiliation with similar others is a fundamental human motive. • Pervasive drive to form and maintain relationships (Baumeister & Levy, 1995) • Social connection is crucial for mental and physical well being • Once in a group, these motives shape our perceptions and interpretations • Threat of breaking a relationship causes great stress • External threats trigger fear and strong motivation to affiliate (Schacter, 1959) • Especially with others who face a similar threat

Group Psychology The Science Behind Collusion • Research studies and real life repeatedly show the desire to affiliate with those facing similar threats • Provides emotional support and cognitive clarity • Hospital patients waiting for open heart surgery prefer to wait with those who have been through the surgery or those also waiting (Kulik & Mahler, 1989). • Strangers band together after natural disasters or terrorist attacks. • Study participants expecting painful shocks chose to wait with other nervous participants (Schacter, 1959)

Group Psychology The Science Behind Collusion • Group Assimilation • Norms-Unspoken rules of conduct • Informal rules (culture) more powerful than formal rules • A sense of what it means to be a good group member • Figuring out the rules takes time and causes anxiety (investment) • What is tone at the top & who faces more sanctions? • Once learned- breaking group norms is difficult and even traumatic from fear of social consequences (person-organization fit) • Studies show that co-workers are very reluctant to report unethical behavior of others on their work teams (Benoit Monin, 2008). • Individuals that go against group norms are strongly disliked by fellow participants-even when the norm was immoral and not personally accepted by other participants (rejection) • People fear being divisive (Whistleblowers) (2008 financial collapse)

Group Psychology The Science Behind Collusion • Do members of groups “average” their views or tend to the extremes? • Group Polarization-Presence of others triggers Dominant Response • The presence of others creates physiological arousal-energizes behavior. Happens in all animals, especially similar species-more similar=greater effect (Zajonc, R. 1965, 1980) • Increased arousal enhances tendency to perform “Dominant Response”-that which is automatic. • Performance and judgment quality depends on task • Easy task=dominant response usually successful • Unfamiliar or complex task=dominant response is often incorrect (Lambert et al. , 2003; Perk & Catrambone, 2007)

Group Psychology The Science Behind Collusion • Do members of groups “average” their views or tend to the extremes? • Group Polarization • Groups exaggerate their initial tendencies (more than individuals) • More cautious on “Gain” related decisions • More risky on “Loss” related decisions • Through discussion, group norms, support of group members

Group Psychology The Science Behind Collusion • The tangible the close and the near term- Vivid factors and people “now” have a larger impact on decision making than abstract and distant factors. • Diffusion of Responsibilty-Deindividuation-In a group, we feel that responsibility is shared by all, lessening our role. Also, if something were wrong, someone else would say something • Small Steps Phenomenon-Redefine normality-subconsciously lower the bar over time. German doctors during holocaust-IPO accounting fraud-Enron traders • Obedience to authority-The “draw” of following orders (diminishes self-responsibility)-Milgram experiments 60% continued to 450 volts-High status increases obedience

Negotiation Research in Auditing • The more ambiguous the accounting issue, auditor likely to accept clients preferred treatment. • The more important/increased pressure surrounding the accounting issue, auditor more likely to concede • The greater number of possible alternative treatments, the less likely the auditor was to insist on their judgment • Clients perceive they are more likely to persuade auditors if firm has short tenure • Auditors are much more likely to waive smaller adjustments that aggregate to a material amount than those that are individually material (Small Steps Phenomenon)