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Behavioral on the field of bioethics. Further study is needed on the intersections of bioethics and behavioral Jennifer E. Miller1, Elinor Amit2,3 and ethics to better understand the implications and Ann-Christin Posten3 impact each field can have on the other. 1Division of Medical Ethics, Department of Population Health, NYU Langone Medical Center, New York, NY, USA Keywords 2Harvard Medical School, , Boston, MA, USA Behavioral economics; Behavioral ethics; Nudg- 3Edmond J. Safra Center for Ethics, Harvard ing; ; Behavioral bioethics University, Cambridge, MA, USA

Abstract Introduction

Behavioral economics explores what affects peo- Traditional economic research assumes that peo- ple’s economic decisions and the consequences ple’s economic decisions are based on the rule of of those decisions for , returns, and maximizing . Behavioral economics differs resource allocation. Traditional economic from this traditional approach in two ways. First, research assumes that people’s economic deci- behavioral economics neither assumes that peo- sions are based on the rule of maximizing utility. ple are good in utility maximization nor that it is Behavioral economics, in contrast, neither their only goal. Rather, according to this assumes that people are good in utility maximi- approach, people have psychological zation nor that it is people’s only goal. Using such as , they have limited cognitive empirical tools, behavioral have resources, and they care about values such as shown rather that people have psychological fairness, all of which might undermine their util- biases, limited cognitive resources, and care ity maximization . The second differ- about other values such as fairness, all of which ence between traditional economic research and might undermine their utility maximization behavioral economics is that the former relies on behavior. Behavioral economic research and theoretical models, whereas the latter relies on insights began slowly influencing the study and empirical tools to test hypotheses. In sum, behav- practice of business ethics in the 1990s, but have ioral economics explores what affects people’s not yet had a substantial and widespread impact economic decisions and the consequences of

# Springer +Business Media Dordrecht 2015 H. Ten Have (ed.), Encyclopedia of Global Bioethics, DOI 10.1007/978-3-319-05544-2_37-1 2 Behavioral Economics those decisions for market prices, returns, and reasoning requires little cognitive capacity and resource allocation. may still be in action when large amounts of cognitive resources are already bound by concur- rent cognitive tasks. Notably, it does not neces- The History and Theories of Behavioral sarily impair decision accuracy. System Economics 2 processing is widely in line with original eco- nomic accounts that construe the individual as a was one of the first to acknowledge rational actor, and thus, most economic research in the eighteenth century that human economic is in line with this account. However, system 1 – decision-making is imperfect and is affected by the automatic type of processing – has been long values of fairness and justice (Ashraf et al. 2005). neglected in economic research and only recently Fisher and Pareto revisited this idea during the gained some prominence. in the twentieth century, trying Apart from investigating different ways of to account for the market crash of 1929 by how information is processed within a human highlighting the human factor in economic mind, another line of behavioral economic decision-making. In 1955, the Herbert research has focused on how human behavior is Simon coined the term “bounded ,” guided by other individuals’ decisions. In their arguing that people do not possess infinite “theory of equity, reciprocity, and ,” decision-making capabilities, but rather are lim- Bolton and Ockenfels (2000) use various eco- ited by the amount of information and time they nomic games to explain that human behavior is have relevant to the decision, as well as other not only motivated by pecuniary outcomes that computational limitations (Simon 1982). In one receives, but also by the relation of one’s own 1979, Kahneman and Tversky published a semi- outcome to the outcomes of others. This assump- nal paper, which presented their “prospect the- tion gets readily apparent in classic economic ory” (Kahneman and Tversky 1979; Messick and ultimatum games. In these two-player games, Tenbrunsel 1996). According to , one player, the proposer, receives a certain people suffer from cognitive biases that affect amount of that he or she can distribute their economic decision-making. For example, between the two players. The other player, the they are averse in choices involving sure responder, can then accept or reject the offer. gains and risk seeking in choices involving sure Rejecting the offer results in a payoff of zero for losses. both players. Standard economic In recent years, a group of theories, collec- assumes that – in accordance with trying to max- tively called “dual process theories,” gained imize utility – more money is preferred over less. growing prominence in the research of behavioral This standard economic assumption would result economics (e.g., Kahneman 2011). Dual-process in the predictions that the responder should theories suggest that there are two distinct types accept any offer that leaves him or her with an of reasoning. One type, often termed “system 2,” amount larger than zero. Assuming this, the pro- includes a rational way of information poser should offer the smallest possible amount processing. In it, deliberative and reflective think- to the responder. However, empirical data sug- ing takes place, and information is systematically gests differently: Responders do not accept all considered and processed in a rule-based fashion. offers larger than zero. Small offers are fre- It is needless to say that “system 2” is effortful quently rejected. Proposers seem to anticipate and requires significant cognitive resources. The this behavior and typically send amounts that other type of reasoning, often termed “system 1,” are larger than minimal. The ultimatum game includes an automatic way of information clearly demonstrates that human economic deci- processing. are used to help form judg- sions are social and affected by the relation of ments and decisions promptly and enable the one’s own outcome to the outcome of others. individual to act fast upon them. This type of They strongly depend on (a) responders’ Behavioral Economics 3 concerns for equity as well as (b) strategic con- prevailing descriptive norms can guide human siderations of proposers. behavior. The social influence on economic decisions is Drawing the attention of individuals to not only evident in the small cosmos of direct existing descriptive norms, thus, increases the comparisons of one’s own outcome to the out- overall norm-conforming behavior. This princi- come of others, but can also be detected on a ple is easily applicable to health-improving larger scale, through the influence of norms. In behavior. For instance, drawing the attention of the example of the ultimatum game described individuals to the norm that a majority of people above, equity and fairness norms influence pro- get vaccinated against a certain disease should posers’ and responders’ expectations and behav- increase the overall percentage of people who iors. Norms that are typically held within decide in favor of getting vaccinated. Hence, societies and tell individuals in a prescriptive actively providing individuals with information manner what they should or in a proscriptive about other people’s behavior is a powerful nudg- manner what they should not do are called injunc- ing tool to change people’s health behavior. tive norms. Individuals typically follow these Knowing that many other relevant individuals norms for social reasons such as building and behave in a certain way may easily influence maintaining interpersonal relationships. - whether oneself will engage in healthier food ingly, apart from such injunctive norms, the mere , engage in cancer-risk reducing description of what other individuals do in spe- such as sunscreen use, reduce alcohol cific situations also forcefully shapes human consumption and smoking behavior, or engage in behavior (Cialdini et al. 1990). precautionary activities such as cancer screenings A second type of norms, so-called descriptive or vaccinations. In one study, for instance, ado- norms, provides information about the preva- lescents who were informed that a majority of lence of different behaviors within a society. their peers try to consume sufficient fruit con- They tell individuals how other people behave sumed more fruit in the following days than ado- under certain circumstances and can be consid- lescents in two control groups who did not ered as decision-making heuristics that provide receive information about the behavioral inten- information about how to behave effectively in a tions of peers (Stok et al. 2014). certain situation. In one classic , for On the same page, not only knowing about example, Cialdini et al. (1990) observed the others’ behavior but also about others’ outcomes littering behavior of individuals in a public envi- may affect how individuals act. On a large scale, ronment that was either clean or full of litter. In this may result in impactful societal effects. For the clean environment, the absence of litter instance, after several clinics in Germany vio- described that no littering was the norm. Con- lated rules and procedure for fairly allocating trary, in the fully littered environment, the litter human organs to patients in 2010, several rela- suggested that littering was the norm. The results tives of potential donors withdrew their approval showed that, overall, individuals littered more in to donate the potential donor’s organs and on a environments that were full of litter compared to societal level the amount of donated organs con- environments that were clean. This effect was tinuously decreased. The number of postmortal even stronger, when the participants’ awareness organ donors continuously declined about one was drawn to the prevailing littering or third from the original amount of 1296 organs no-littering norm by seeing a person who littered donated in 2010 to 864 organs donated in 2014, in the clean versus fully littered environment. In as the German Organ Transplantation Foundation the clean environment, seeing a person littering (Deutsche Stiftung Organtransplantation) led individuals to litter less. However, in the reported. littered environment, seeing a person littering However, it is important to note that the fostered the participants’ littering behavior. This effects of behavioral interventions may vary finding constitutes one example of how across cultures. Even the basic perception of 4 Behavioral Economics fairness, which appears to come naturally to indi- early adopters, seeking better ways to understand viduals, varies across cultures. This difference is, the causes and remedies for prominent ethics for example, observable in children’s behavior. scandals in large corporations like Enron. The Whereas in Western cultures children distribute scandals showed the inadequacy of traditional joint gains according to the of the approaches to business ethics which, up until contributing members, in some African cultures then, had largely focused on what people should children do not distribute profit according to do as well as which principles, virtues, and values effort at all, but rather according to egalitarian should guide their decisions. Behavioral ethics, in principles (Scha¨fer et al. 2015). Similarly, one of contrast, adds understandings and descriptions of the key variables in human economic decision- how decisions are actually made by people and making, namely, risk , varies not only why good people sometimes do bad things between individuals but also between countries despite exposure to normative ethics training. and cultures. Specifically, in countries with The precise definition for the field of behav- higher (GDP), people ioral ethics varies. Bazerman and Gino (2012) are more risk averse when it comes to gains, but summarize the field as examining “the determi- more risk seeking when it comes to losses (Rieger nants of ethical and unethical behavior.” Its con- et al. 2015). The cultural variation in attitudes cepts were translated into business ethics in large toward fairness and risk preference may critically part because of a 1996 book edited by Messick determine which outcomes behavioral interven- and Tenbrunsel called Codes of Conduct: Behav- tions may foster in different cultures. ioral Research into Business Ethics. Furthermore, changing behavior through Bioethics has been even slower than business nudging is clearly linked to the values associated ethics to adopt behavioral ethics concepts. It, like with the different behavior options. In the case of business ethics, has been dominated by debates vaccination, nudging people to get vaccinated go over which normative theory is better for guiding hand in hand with the opinion that getting vacci- decision-making and the moral duties that result nated is in line with the benefit of society and, from various ethics frameworks like utilitarian- thus, the desirable behavior. Many people might ism, deontology, principlism, personalism, and agree that this is indeed the case. However, peo- virtue theory. Many bioethicists still regularly ple differ in their ideologies regarding this ques- argue that ethical competency and moral tion, and certainly not everyone would agree that decision-making can be mostly learned, culti- getting vaccinated is a desirable outcome. Nudg- vated, and developed over time. ing people is therefore often seen as paternalistic Bioethicists tend to ignore empirical evidence in nature because it is associated with an assump- showing that many moral decisions are based far tion about which behavior is (or is not) desirable less on rational deliberations than on unconscious (for an overview of criticism and a response, see subliminal stimuli and situational forces. These Sunstein 2015). Because values for desirable out- forces and stimuli can affect both the way people comes may vary across different groups, socie- make decisions, for example, whether they use a ties, and cultures, arguments regarding the utilitarian or deontological framework, as well as dependence of nudging highlight that the direc- their decision outcomes. For example, using the tion of the nudging influence is strongly depen- words “we” and “us” over “you” and “them” in dent on cultural goals and values. conversations can unconsciously elicit higher levels of trust from people and alter decision outcomes. Similarly, visual representations, in Behavioral Economics and Bioethics contrast to verbal representations of information, can prompt people to make deontological versus It was not until the 1990s that the lessons learned utilitarianism moral judgments (Amit and Greene from behavioral economics slowly migrated into 2012). While many ethicists acknowledge blame- the field of ethics. Business ethicists were the worthiness is related to intentionality and Behavioral Economics 5 activation of the will, they still underestimate the fact that Company X sold the drug knowing the volume of stimuli that can decrease a person’s would increase. This case hints that if a rational deliberation and spark more emotional, pharmaceutical company aims to increase its uncontrollable, and automatic processing. profits while protecting its reputation, it should Even the ordering of expressed opinions or license its drug and let someone else raise the information objects can anchor and affect group price, rather than raise the price itself and make and individual decision-making. For instance, a the same profit. person can be manipulated into choosing healthy food over junk food from a cafeteria line, simply by manipulating where the food is placed in rela- Conclusion tion to the other. If the healthy food is placed at the beginning of the food options and the junk Traditional approaches to economics assume that food at the end, the person will be more likely to people’s economic decisions are based on the rule unconsciously select the healthy option. of maximizing utility. In contrast, behavioral Similar strategies can be implemented for ethics neither assumes people are good at utility nudging people to use the stairs over elevators maximization nor that it is their only goal. Using for health benefits, to donate their organs and empirical tools, behavioral ethics shows people tissues, or to choose the best insurance plan. have psychological biases (such as loss aversion), Take some countries in Europe that use an limited cognitive resources, and care about other opt-out system for organ and tissue donations. values (such as fairness), which can weaken their In contrast, the United States asks for people to utility maximization behavior. These lessons opt in and volunteer to donate their organs. Some have slowly found their way into the business bioethicists argue the United States should switch ethics literature. However, bioethics scholars to an opt-out model to increase the donor pool as have been slower to adopt behavioral ethics con- people generally keep the status quo default cepts. Further study is needed on the intersections option. This raises questions about the ethicality of bioethics and behavioral ethics to better under- of intentionally manipulating people’s choice stand the implications and impact each field can architecture to elicit specific decision outcomes, have on the other. even good outcomes (Thaler and Sunstein 2009). Thaler and Sunstein call this type of nudging a form of libertarian . Situational forces do not just affect the Cross-References decision-making of individuals; they also affect how we judge the decisions of others. People tend ▶ Business Ethics to blame others less if an intermediary carries out ▶ Professional Ethics a harmful action, rather than if the harmful out- come is done directly (Paharia et al. 2009). For example, imagine a large drug company (called References Company X) has two cancer drugs used by patients who really need them. The prices for Amit, E., & Greene, J. D. (2012). You see, the ends don’t both drugs go up. But, in one instance, the drug justify the means visual imagery and moral judgment. price was raised directly by Company X, whereas Psychological Science, 23(8), 861–868. in the second case the drug was sold to Company Ashraf, N., Camerer, C. F., & Loewenstein, G. (2005). Adam Smith, behavioral economist. Journal of Eco- Y and Company Y raised the price (which Com- nomic Perspectives, 19, 131–145. pany X knew was going to happen). People are Bazerman, M., & Gino, F. (2012). Behavioral ethics: generally more lenient on Company X in the Toward a deeper understanding of moral judgment second case, where Company Y raised the price, and dishonest (Working Paper 12–054). Harvard Busi- ness School. despite equal outcomes in both situations and the 6 Behavioral Economics

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