Bounded Ethicality: The Perils of Loss Framing

Ethical decision making is vulnerable to the forces of automaticity. People behave differently in the face of a potential loss versus a potential gain, even when the two situations are transparently identical. Across three experiments, decision makers engaged in more unethical behavior if a decision was presented in a loss frame than if the decision was presented in a gain frame. In Experiment 1, participants in the loss-frame condition were more likely to favor gathering “insider information” than were participants in the gain-frame condition. In Experiment 2, negotiators in the loss-frame condition lied more than negotiators in the gain-frame condition. In Experiment 3, the tendency to be less ethical in the loss-frame condition occurred under time pressure and was eliminated through the removal of time pressure.

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