Why? I can’t figure it out.

THIS trait requires him or her to get silent endorsement and seek “external support” that distances the cheater from the victims. If we list the corporate biggies who have been running scams a KEY issue has been made by Mark. This is important.

If there are agencies who will AUDIT your books and help you FUDGE your accounts, or rating agencies who will take a fee and RERATE or help in renaming or repackaging a worthless asset so as to be able to sell it forward; THEN then WHY should cheaters be our focus for condemnation.They are small time players who happen to have been lucky with repetitive success based on the external support that they must exploit as often as possible. Let us say that they have an “exploitative” genome issue that forces them as an addict to “exploit the permissive enviroment”. So clever guys like Madoff, Sanford or even the Indian Raju of Satyam fame are smart BUT they must be seen to be minority players within their own scandal.

Conservatives in America may not be able to understand this as their linear logic still prevents them from seeing a gun or a violent play game as “facilitators and a part of the environmental dimension that frames perceptions” and creates the process of thinking about killing fellow students.

The facilitators in this case are the audit companies, the account professionals, and the rating agencies who have specifically derailed the basic norms of economics. They have shifted everyones vision from current realities to future virtual worlds and thus very subjective values.

Without these professionals cheating would stay at street level and the longevity would be restricted to two or three scams before getting caught. paradoxically it is democracy that allows “exploitative brains to vacillate between creative ideas that BUILD and GROW or “extract and cheat”.

I believe that these examples do not deter more from cheating but give intelligent and over ambitious individuals to tip towards the short term return. The era of uncertainty and complexity does not help.

India has an unblemished record of “progressive corruption” where even the honest get corrupted. the facilitators are at every corner and every stage of commerce and day to day to life.

This is leading me to develop a simple explanation of what i believe must be “good corruption and bad corruption”. I hope to complete this next month.

maybe another lesson that we should learn from Maddof’s scandal is that even in the face of evidence we are capable of ignoring it. Since 2000 there was hughe and clear evidence available for authorities that showed the great fraud that was having done by Maddof. But instead of being investigated and taken out of bussines, Maddof got the highest consideration by rating agencies and could presume of having the most important costumers around the world.
We need cues to decide, and is clear that if someone is the adviser of the vips and gets the maximun financial calification, which one of us could ignore the oportunity of investing with that guy?
But if we have documents, data a reliable declarations from expert blaming him for fraud, how can we ignore it?. Even more, if we are experts having and understanding all that information, how can we ignore it and prefer not to question rating credentials and the glamour of the vips?

This was the first time I read your blog, and I thoroughly enjoyed your analysis. It raised a few questions for me, which you (or any one else) could perhaps enlighten me on.

(1) Diversification of Assets: For me, an important factor of the Madoff scandal in contrast to other financial blunders was the clear affiliation to a single person. While, Madoff was considered the mastermind behind this infamous and awfully unethical scheme, it was still a scheme executed by quite a number of people. Unlike the more large-scale cases before it, this attributes blame to an individual, someone who did not have a higher authority to answer to. However, initially, it was this personalization (among many many other things) that attracted investors in the first place. The idea here was that you were placing your money with a person rather than a large corporation in which you were just a number. I was intrigued by the potential for people to suddenly diversify their assets. I wondered however, if the “identifiable victim effect” will play more to investor’s insecurities of putting their money into small firms that could potentially pull off a Madoff stunt. The (somewhat) irrational fear of small company foul play could trump the lack of personalization and bureaucratic checkpoints that come with the territory of a larger investment company.

(2) Ingroup/Outgroup Effect: I wonder if your discussion of the possibility for further cheating amongst the financial elite is still relevant once Madoff was found guilty or even once he was arrested. Your study in how simple attire could affect participant behavior was a clever one, simple and highly illustrative. However, I understood your study to show increased cheating amongst the ingroup when there were no ramifications of the confederate’s actions. Did you by any chance include a variation of the study with the same conditions but if the confederate was punished very quickly for his actions? My only idea here is that the confederate (in the plain t-shirt condition) is considered the in-group up until the confederate is publicly punished for his actions. Then the participant no longer considers the confederate as similar to him/herself leading to no change or perhaps even a decrease in cheating by the participant. Once punished, the confederate becomes an extreme of the outgroup. While the participant may regard themselves as a student of a particular university, considering other university students as the outgroup, I would think a confederate that is punished and labeled as unethical heightens this outgroup effect. The participant would want to dissociate themselves as much from this fraudulent act as possible considering themselves more ethical than the average (perhaps a slight Lake Woebegone effect). Effectively, this scandal and public coverage may have created A ‘make an example of one and the rest will fall in line’ theory for how the financial elite may automatically behave.

This was a poignant topic and I am glad I was fortunate enough to read the blog entry today. Thank you for your work.