Ethical blindness

Published on March 15, 2021 by Market Abuse Centre

When considering conduct, it is important to note that ethical blindness could appear. Misconduct is not just the consequence of people who are acting willfully. A person is not perse fully aware of the consequences of his actions. Humans simply do not have access to all information, nor do people process all available information, and neither are human beings objective and, hence, they do not process all information properly. Consequently, ethical blindness could appear, potentially leading to undesirable behaviour.

Bad things are not per se done by bad people. Everyone can do things which are undesirable, to put it mildly. Our behaviour is influenced by both internal and external drivers. Circumstances impact both the external and internal processes that we face. Circumstances drive our decisions much more than it is often assumed:

 

  • People around us influence our behaviours. This works both in positive and negative ways. Meaning, in case people around act ethical and show integrity, this has a positive impact on others. However, the opposite could also apply. In general, people are also often driven by peer pressure and group pressure. More generally speaking, culture drives behaviour. People are influenced by what they experience. What we see, hear, feel or sense embeds in our mental structure.

 

  • Internally, within our mental structure we face cognitive biases and other inefficienties. Our brain may be capable of a lot but, but it certainly faces limited competencies. Sometimes, our mind plays tricks on us. Psychological forces can create a strong context. Frames can be too narrow, thus creating risk.

 

Summarising the previously mentiones aspects, we need to conclude the following: Firstly, people often have an inappropriate view on reality. Secondly, people could have difficulty interpreting reality, which leads to misconceptions or misperceptions, and, eventually, even to ethical blindness. Thirdly, one can be quite clear on reality, but choose to behave in an inappropriate way, with full awareness of doing things wrongly. The latter is usually done if one believes to be able ‘to get away with it’.

 

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