Unethical Behavioral Finance: Why Good People Do Bad Things.

Just as people at times make bad (i.e., irrational) financial decisions, they also make bad ethical decisions. However, it is important to note that this acting badly or unethically is not always explainable simply in terms of sheer greed or blatant selfishness. Just as it is fruitful to look at the irrationalities governing financial investing, it is similarly fruitful to look at irrationalities that prompt people to behave unethically. Since sound ethical analysis requires good reasons for acting in the right way, good ethics should be a rational enterprise. However, just as we often act irrationally in making financial decisions, irrational elements can creep in to corrupt our ethical judgments and behavior. Behavioral ethics asks the question, "Why do good people make bad decisions?" We look at six factors: (1) weakness of will, (2) ignorance, (3) slippery slopes, (4) arrogance, (5) rationalization, and (6) docility. [ABSTRACT FROM AUTHOR]