The other day I came across an interesting talk at TED.com. The subject matter I found very enlightening.
There are several implications to what Dr. Ariely has shown here. I will start with the one that he explicitly mentions, the stock market. Based on his work it would imply that stock markets would always contribute to dishonest behavior. Because stocks, bonds and securities are a step away or more from actual money or commodities people will naturally try to cheat at trading them. This point was made with his test where subjects were given tokens in reward for answering questions right. As he pointed out, that one additional step lead more people to cheat. This would seem to imply that an unregulated stock market will always fail due to dishonest and unethical practices.
Based on his work we could conclude that there are only two ways to have a stock, bond or securities market that will not be overrun by dishonest behavior sooner or later. The first is heavy regulation (similar to the control set where everyone turned in their tests to be graded and were paid accordingly). The second is to have a consistent moral system and to constantly remind the participants of it (his example where test subjects were asked to recall the 10 commandments).
These ideas can be extended into other areas, such as corporate management, government bureaucracy, classroom administration and business transactions. On the one hand most problems with dishonesty can be taken care of through either regulation or reminding people of their moral codes. In the absence of a moral code, or a consistent moral code, it would seem that the only way to keep most people honest would be through active regulation of their actions. This of course runs into the problem of who will then regulate the regulators etc.. It would seem that the easier option would be to simply remind people of their moral code. This seems to be the route taken by the University of North Carolina.
At UNC all students are required to sign the university honor code, and also whenever they turn in an assignment they are required to write a note stating that what they are turning in is their own work (i.e. they did not cheat) and then they must then sign it. This is done on every test, paper, lab report and homework assignment (as an interesting note, this is required of all undergraduates but for graduate students this requirement is hardly ever enforced, but for graduate students there is a greater expectation of maturity, and the punishment for cheating is usually much more severe). So upon watching Dr. Ariely's talk I realized that the UNC policy of signing the honor code for everything including single page homework assignments was an attempt to remind the students of their "moral code" and to try to prevent most cases of cheating. The efficacy of this particular method is debatable and open to interpretation.
This effort to reduce dishonesty may be intentional, but after reflecting on it there are many places where this method of reducing dishonesty is used almost unintentionally. In the case of the BYU testing center there are pictures of Jesus and Karl G. Maeser along with his famous chalk circle quote. These serve as reminders of the BYU honor code and the moral system in general that inspired it. These pictures, quotes and reminders were placed with the intention of reminding people about their moral duties and thus preventing, to some degree, cheating.
This method does not prevent all cheating but it does work to prevent the majority of it, because as Dr. Ariely pointed out, the increase in cheating did not come from one or two individuals who "skewed the curve" but rather from a significant portion of the people cheating just a little bit. So the purpose of using the moral reminders is not to prevent all cheating but to prevent almost everyone from doing it. The rest of the people can be taken care of through regulation.
In the case where moral reminders are not allowed or are not permissible then the default to preventing unethical behavior must be through regulation, or enforcement of specific rules. Again to show this I turn to the honor codes of both UNC and BYU. A quick comparison between the two shows that the UNC code (known as "The Instrument") is much much longer. I think a pdf version of it is about 50-60 pages long. On the other hand the core of the BYU honor code consists of nine short statements (one line each) and then four specific policies. The whole code, including disciplinary policies and procedures is only slightly longer than the Preamble to the UNC honor code. Why the difference? Again the BYU code relies on a common and consistent moral system that is shared (or should be shared) by everyone at BYU. The main enforcers of the BYU honor code are the students themselves, they are given the duty of reminding themselves and each other about the moral commitment they have made, and in general it works.
The UNC honor code is much longer and full of lots of rules and regulations. Despite this BYU has arguably a stricter honor code. So again why the difference? The UNC code does not (and some would say could not) rely on a common moral system shared by the students and thus it (meaning the honor code and UNC in general) must create its own moral framework. In the absence of the ability to appeal to a moral code we are either left to deal with people cheating (being unethical, if only to a small degree) or have to resort to imposing systems of rules and regulations.
So now let us consider these ideas in the most general sense, that of our lives in general. Here it would seem that we have three options: 1. Live without any means of controlling unethical behavior, 2. Prevent unethical behavior by reminding people about their common moral code or, 3. Prevent unethical behavior through rules and regulations.
With option #3 rules must be made for all instances, possibilities, contingencies and situations. The problem with this option is that we eventually end up with a long document detailing all the rules as in the case with the UNC honor code, or worse the US tax code. With option #2 the resulting code of conduct may be greatly reduced (9 lines of general guidelines, or 10 commandments) but it requires that each and every person be committed to living by the code and be constantly reminded of it. This requires more personal involvement and more personal investment to learning and living by the moral system but overall the "cost" or "overhead" of the moral code is greatly reduced. Option #1 is not desirable and is the whole reason for even mentioning options 2 and 3. More later.