Ethics Exam One

What is the difference between ethics and the law?
- Ethics are moral principles guiding right and wrong behavior, while laws are rules enforced by the government. Something can be legal but unethical (e.g., price gouging) or illegal but ethical (e.g., whistleblowing in corrupt organizations).

What are the three components of the Fraud Triangle?

- Pressure – Financial or performance-based stress that pushes someone toward fraud.

-Opportunity – A lack of oversight or weak controls that allow fraud to happen.

-Rationalization – The mental justification for unethical behavior (“I deserve this”).

Why is ethical awareness important, and what influences it?
-Ethical awareness matters because people cannot act ethically if they don’t recognize an issue as ethical. It is influenced by upbringing, social norms, organizational culture, and personal values.

What are the three major ethical decision-making approaches, and what are their weaknesses?

-Consequentialism (Utilitarianism) – Focuses on outcomes (greatest good for the greatest number). Weakness: Can justify harming individuals for the greater good.

-Deontological Ethics – Focuses on rules and duties. Weakness: Rigid and doesn’t account for consequences.

-Virtue Ethics – Focuses on character and moral integrity. Weakness: Subjective and lacks clear decision-making guidelines.

What is the difference between ethical judgment and ethical action?
-Ethical judgment is deciding what is right, while ethical action is following through on that decision. Barriers to action include fear, social pressure, or incentives to behave unethically.

What are the three levels of Kohlberg’s Moral Reasoning Theory?

-Preconventional – Focuses on self-interest (avoiding punishment, seeking rewards).

-Conventional – Focuses on social norms and approval (following laws, being a "good" person).

-Postconventional – Focuses on abstract principles (justice, human rights, ethical principles beyond laws).

What did Milgram’s experiment reveal about obedience to authority?
-People will follow authority figures even when asked to harm others, as seen when participants delivered (fake) electric shocks to others under instruction. This explains how unethical behavior spreads in organizations.

What is the Dark Triad, and how does it affect ethical decision-making?

-Narcissism – Self-centeredness and entitlement.

-Machiavellianism – Manipulativeness and deceitfulness.

-Psychopathy – Lack of empathy and remorse.

-People with high Dark Triad traits are more likely to engage in unethical behavior for personal gain.

What is locus of control, and how does it affect ethical decisions?

-Internal locus of control – Belief that one's actions determine outcomes; more likely to act ethically.

-External locus of control – Belief that fate or others control outcomes; more likely to justify unethical actions.

What is cognitive dissonance, and why do people experience it?
-It is the mental discomfort from holding contradictory beliefs or behaving inconsistently with one’s values. People justify actions to reduce this discomfort (e.g., rationalizing cheating because "everyone does it").

What is moral disengagement, and what are some examples?
-Moral disengagement allows people to justify unethical behavior. Examples include:

-Moral Justification – “It’s for a good cause.”

-Advantageous Comparison – “At least it’s not as bad as…”

-Displacement of Responsibility – “I was just following orders.”

-Diffusion of Responsibility – “Everyone else was doing it.”

-Distorting Consequences – “It’s not that big of a deal.”

-Dehumanization – “They aren’t real people.”

-Attribution of Blame – “They brought this on themselves.”

-Slippery Slope – Small unethical acts leading to bigger ones over time.

What is confirmation bias?
-The tendency to seek out and interpret information that confirms preexisting beliefs while ignoring contradictory evidence.

What is the Dunning-Kruger Effect?
-People with low ability in a subject tend to overestimate their competence, while experts tend to underestimate their own knowledge.

What is loss aversion, and how does it affect decision-making?
-People fear losses more than they value gains, leading to risk-averse behavior even when potential gains outweigh losses.

What is the sunk cost fallacy?
-Continuing an unwise decision due to prior investments (e.g., staying in a failing business because of past financial contributions).

What is organizational culture, and how does it impact ethics?
-Organizational culture is the shared values, norms, and practices of a workplace. It influences whether employees feel encouraged to act ethically or pressured to cut corners.

What are the formal and informal systems that influence ethical culture?

-Formal Systems: Policies, codes of conduct, leadership messaging.

-Informal Systems: Workplace norms, social expectations, unwritten rules.

-Misalignment Example: A company that promotes ethics in policy but rewards employees for unethical behavior in practice.

How does the Ford Pinto case relate to ethics?
-Ford used a cost-benefit analysis to justify not fixing a deadly design flaw, prioritizing profit over human life (utilitarian reasoning gone wrong).

What was unethical about Theranos?
-Theranos misled investors and patients by claiming its technology worked when it did not. Leaders engaged in deception to maintain their reputation and funding.

How did the Atlanta Cheating Scandal demonstrate ethical breakdowns?
-Teachers and administrators altered test scores due to extreme pressure to meet performance targets. This is an example of obedience to authority and diffusion of responsibility.

What ethical issues arose at Uber?
-Uber’s toxic workplace culture encouraged unethical behavior, such as ignoring sexual harassment claims and breaking laws to avoid regulations.

What was unethical about Wells Fargo’s actions?
-Employees were pressured into opening fraudulent accounts to meet aggressive sales quotas, demonstrating the impact of unethical corporate culture and formal/informal system misalignment