BazermanMoore

Bounded Ethicality 123
within firms such as Enron and its auditor, Arthur Andersen; gatekeepers within these
companies; and failed governmental regulation. Business leaders were blamed for their
role in the presumed ethical decline, and business schools were criticized for failing to
provide ethical training to future leaders.
The media implied that the key to stemming the tide of financial scandals was to
stop managers from deciding to engage in unethical behavior. This approach is broadly
consistent with the field of ethics, which focuses on deliberative decisions. In this section,
we will challenge this ethical perspective on corporate scandals. We are in favor of
changing the incentives of organizational actors to encourage more ethical behavior and
would be delighted to see genuine corporate criminals serve time in prison. But recent
research provides a compelling case that the vast majority of unethical behaviors occur
without the actors’ conscious intention to behave unethically.
We focus on the cognitive biases that lead honorable people to engage in unethical
behavior without realizing that they are doing so. The first half of this chapter examined
the ways in which fairness judgments depart from standard economic models. This second
half of the chapter considers how cognitive biases allow us to act in ways that contradict
our own intended standard of ethics. These deviations from our intended
standard are systematic and predictable, just as the biases from rationality discussed in
Chapters 2 through 6 are predictable and systematic. Rather than concentrating on intentionally
corrupt behavior, we will discuss recent research that identifies the types,
magnitudes, and causes of unethical behavior that occurs without the awareness of the
actor—what we refer to as bounded ethicality (Chugh, Bazerman, & Banaji, 2005). This
perspective diverges from the standard treatments of ethics, which assume the explicit
analysis of appropriate action by the individual, yet complements this traditional view.
Our central argument is that understanding and changing the ethicality of human
action requires going beyond the common assumption that ethically challenged behavior
results from people choosing self-rewarding behavior over doing what is right. The
assumption of the conscious agent as the sole determinant of human action has been
clearly refuted (Fiske, 2004). New evidence points to the limitations of the conscious
mind, while emphasizing the power of the unconscious mind to drive us to engage in
unethical behavior (Banaji & Bhaskar, 2000; Murnighan, Cantelon, & Elyashiv, 2004;
Wegner, 2002).
We use the term bounded ethicality to refer to the psychological processes that
lead people to engage in ethically questionable behaviors that are inconsistent with
their own preferred ethics. Bounded ethicality comes into play when an executive
makes a decision that not only harms others, but also is inconsistent with his or her
conscious beliefs and preferences. Managers develop protective cognitions that lead
them to engage in behaviors that they would condemn upon further reflection or
awareness. For example, Chapter 4 reviewed the omissions bias, which shows that people
feel less responsible for harms caused by inaction than for harms caused by action.
When managers become aware of an ethically questionable situation that is not formally
part of their responsibility and fail to get involved, they may be quick to justify
inaction as ethical, when greater reflection would prove inaction to be more harmful
than many errors of action. Chugh (2004) argues that bounded ethicality is exacerbated
by the high-paced demands of managerial life, which demand the speed and