Friday, July 11, 2008

Paul Kedrosky's Infectious Greed

Paul Kedrosky's Infectious Greed: "Money Makes People Stupid, Parts XXVII

Some interesting results in a new study into how people behave in the presence of money. The gist: When money is visible and supervision intermittent, people change their participation for the worst in a hurry.

The Abundance Effect: Unethical Behavior in the Presence of Wealth

Three laboratory studies investigate the hypothesis that the presence of wealth may influence people's propensity to engage in unethical behavior. In the experiments, participants are given the opportunity to cheat by overstating their performance or by stealing money. In each study, one group is stimulated by the visible proximity of wealth. We find that the presence of abundant wealth leads to more frequent cheating than an environment of scarcity. Our third experiment also investigates the potential mechanisms behind this effect. Our results show that feelings of envy towards wealthy others lead to unethical behavior. Our findings offer insights into when and why people engage in unethical behavior.

More here.

Anyone who has ever worked on a trading floor won't be surprised. Part of the cause of rogue traders is abundant visible wealth, and only on-again, off-again supervision."

No comments: