Stumbling Into Bad Behavior By MAX H. BAZERMAN and ANN E. TENBRUNSEL

IT’S easy to look at big names like Warren E. Buffett, and big companies like Ernst and Young, and be judgmental. Of course they overlooked ethical lapses. Why wouldn’t they? That’s business.

Regulators, prosecutors and journalists tend to focus on corruption caused by willful actions or ignorance. But in our research, and in the work of other scholars who study the psychology of behavioral ethics, we have found that much unethical conduct that goes on, whether in social life or work life, happens because people are unconsciously fooling themselves. They overlook transgressions — bending a rule to help a colleague, overlooking information that might damage the reputation of a client — because it is in their interest to do so.

When we are busy focused on common organizational goals, like quarterly earnings or sales quotas, the ethical implications of important decisions can fade from our minds. Through this ethical fading, we end up engaging in or condoning behavior that we would condemn if we were consciously aware of it.

The underlying psychology helps explain why ethical lapses in the corporate world seem so pervasive and intractable. It also explains why sanctions, like fines and penalties, can have the perverse effect of increasing the undesirable behaviors they are designed to discourage.

In one study, published in 1999, participants were asked to play the role of a manufacturer in an industry known for emitting toxic gas. The participants were told that their industry was under pressure from environmentalists. To ward off potential legislation, the manufacturers had reached a voluntary but costly agreement to run equipment that would limit the toxic emissions. Some participants were told they would face modest financial sanctions if they broke the agreement; others were told they would face no sanctions if they did.5 pages, double space