Loss Framing and Corporate Boards

Richard W. Painter

Richard Painter, who has written about the psychology of ethical decision-making in various contexts (e.g., “The Psychology of the Coverup” in Getting the Government America Deserves: How Ethics Reform Can Make a Difference and Irrationality and Cognitive Bias at a Closing in Arthur Solmssen’s The Comfort Letter), has an interesting post at Legal Ethics Forum entitled, “Do declassified boards put corporate managers in a ‘loss frame’ that encourages financial, legal and ethical risk taking?” (Loss aversion, a foundational concept in behavioral economics, in addition to making casinos rich, helps to explain unethical behavior). In the corporate context, Professor Painter calls for empirical research to determine whether the methodology of board elections influences law compliance — a reminder of the importance of, and need for, applied research on the role of psychology in ethical decision-making for legal and non-legal actors (for another excellent discussion of the role of behavioral ethics on corporate directors, see Antony Page’s article in the Illinois Law Review, Unconscious Bias and the Limits of Director Independence).

[edited: 1/17/15 8:52pm]

Advertisement

Programming Note #3

It’s not everyday that behavioral science takes center stage on national TV.  Those who follow Morning Joe (and even those who don’t) may enjoy this video clip of Cass Sunstein‘s new co-authored book (which I’m currently reading and highly recommend), “Wiser:  Getting Beyond Groupthink to Make Groups Smarter”:

And while you’re at it, how about (re)visiting Cass Sunstein’s paper co-authored with Daniel Kahneman: “Cognitive Psychology of Moral Intuitions.”  Happy reading (and watching) — and new year!