Any economist who thinks people are rational, should read the books “Predictably Irrational: The Hidden Forces That Shape Our Decisions” and “The (Honest) Truth About Dishonesty: How We Lie to Everyone – Especially Ourselves” written by Dan Ariely, professor at Duke University. He explores the fertile intersection between psychology and economics to understand why we often make less than rational decisions.
While he has worked on many interesting irrational behaviors–like engaging in risky sex or paying way too much for a good or service–this article is about dishonesty, and what we can do about it.
According to Ariely, we all struggle with two conflicting motivations: On the one hand, we want to reap the easy benefits from cheating and get as much money, glory and satisfaction as possible as quickly as possible; but on the other hand, we want to be able to perceive ourselves as honest, honorable people.
Ariely has made numerous laboratory experiments to understand how that internal conflict plays out in most people. He summarized that work in a Wall Street Journal article, and I will summarize it even further here: