Conflict of Interest

Conflict of interest arises when we have incentives that conflict with our professional duties and responsibilities in ways that cause harm to others and to society.

Discussion Questions

1. What conflicts of interest have you personally experienced in personal or professional roles?

2. If you perceive a potential conflict for yourself, what are some ways you might ensure that this conflict doesn’t lead to unethical behavior for you and others?

3. When have others’ conflicts of interest impacted how you or those you know were treated?

4. What types of policies can or do organizations implement to try to reduce conflicts of interest or their costs?

5. Why do you believe conflicts of interest are so pervasive in society? Why don’t we take more steps to avoid them?

6. Why is it so hard for individuals to recognize their own conflicts of interest, and how is this impacted by behavioral biases?

Case Studies

Cheney v. U.S. District Court

On June 24, 2004, the United States Supreme Court decided the case of Cheney v. U.S. District Court. Believing that U.S. Vice President Dick Cheney’s handling of an energy task force violated the Federal Advisory Committee Act, and suspecting undue influence in governmental deliberations by the energy industry, two environmental groups—the Sierra Club and Judicial Watch—sued to discover official documents relating to the meetings. Cheney and other government defendants moved to dismiss the lawsuit, but the federal district court in Washington D.C. ordered defendants to produce information about the task force. Defendants appealed, and the Circuit Court also held that they had to turn over the information. Defendants appealed again to the Supreme Court. A majority of the Supreme Court, for largely procedural reasons, held that the Circuit Court should reconsider the appeal in light of new legal guidelines that the Supreme Court set out. Dissenters argued that the lower courts had ruled correctly, and the case should be returned to the District Court where it could go forward. Justice Antonin Scalia voted with the majority, but also said that he favored dismissing the case and ruling for Cheney and the other defendants. Justice Scalia also filed a statement explaining why he was refusing requests that he recuse himself from the case.

Justice Scalia’s opinion in favor of Cheney was controversial. While the case against Cheney was pending, Scalia had taken a widely publicized duck hunting trip with defendant Cheney and others. Federal law states that “any justice or judge shall disqualify himself in any proceeding in which his impartiality might be questioned.” Critics of Justice Scalia thought it reasonable to question his impartiality. Stephen Gillers, a New York University law professor and expert on legal ethics, noted, “A judge may have a friendship with a lawyer, and that’s fine. But if the lawyer has a case before the judge, they don’t socialize until it’s over. That shows a proper respect for maintaining the public’s confidence in the integrity of the process.”

Defenders of Justice Scalia argued that these criticisms were politically motivated by people who wished that Scalia not be able to vote in the case. They said it is common for justices to be friends with political actors who might be involved in cases coming before the Court. Defending his actions, Scalia stated, “Social contacts with high-level executive officials…have never been thought improper for judges who may have before them cases in which those people are involved… For example, Supreme Court Justices are regularly invited to dine at the White House, whether or not a suit seeking to compel or prevent certain presidential action is pending.”

Discussion Questions

1. Do you think there is a conflict of interest in this case? Why or why not?

2. Psychological studies indicate that people have an easy time understanding how conflicts of interest may sway the decisions of other people, but often have great difficulty perceiving that similar conflicts might prejudice their own decisions. Is there evidence of this in the case of Cheney v. U.S. District Court? Briefly explain.

3. Do you think it would be easy to rule against a friend or a former employer in a high-stakes case? Does this create a conflict of interest between a judge’s natural motivation and the duty to render justice impartially? Why or why not?

4. What do you think would have been the most ethically defensible action for Justice Scalia to take? Explain your reasoning.

5. What is your reaction to the following passage by professors Max Bazerman and Anne Tenbrunsel commenting upon Justice Scalia’s opinion in this case:

“Scalia’s comments [on conflict of interest] indicate that he rejects or is unaware of the unambiguous evidence on the psychological aspects of conflicts of interest. Even more troubling than this lack of understanding are the Supreme Court’s rules which, like most guidelines and laws that are intended to protect against conflicts of interest, guard only against intentional corruption. Yet most instances of corruption, and unethical behavior in general, are unintentional, a product of bounded ethicality and the fading of the ethical dimension of the problem.”

Do you agree with their assessment? Why or why not?

Bibliography

28 U.S.C. sec. 455(a) – Disqualification of Justice, Judge, or Magistrate Judge
https://www.gpo.gov/fdsys/granule/USCODE-2011-title28/USCODE-2011-title28-partI-chap21-sec455/content-detail.html

Cheney, Vice President of the United States, et al. v. United States District Court for the District of Columbia, 541 U.S. 913 (2004)
https://law.resource.org/pub/us/case/reporter/US/541/541.US.913.03-475.html

Cheney, Vice President of the United States, et al. v. United States District Court for the District of Columbia et al., 542 U.S. 367 (2004)
https://law.resource.org/pub/us/case/reporter/US/542/542.US.367.03-475.html

Justices Scalia and Kagan Duck Washington for Hunting Getaway
http://blogs.wsj.com/law/2014/12/17/justices-scalia-and-kagan-duck-washington-for-hunting-getaway/

Was the duck hunt a conflict of interest?
http://www.csmonitor.com/2004/0213/p02s01-usju.html

Scalia’s Explanation for Recusal Refusal is Unconvincing
http://www.jurist.org/forum/ross1.php

Trip with Cheney Puts Ethics Spotlight on Scalia
http://articles.latimes.com/2004/jan/17/nation/na-ducks17

Scalia Angrily Defends His Duck Hunt with Cheney
http://www.nytimes.com/2004/03/18/politics/scalia-angrily-defends-his-duck-hunt-with-cheney.html

Scalia and Cheney’s outing: No ordinary duck hunt
http://usatoday30.usatoday.com/news/washington/2004-02-06-cheney-scalia_x.htm

Blind Spots: Why We Fail to Do What’s Right and What to Do About It
http://www.worldcat.org/title/blind-spots-why-we-fail-to-do-whats-right-and-what-to-do-about-it/oclc/679940661

Conflicts of Interest: Challenges and Solutions in Business, Law, Medicine, and Public Policy
http://www.worldcat.org/title/conflicts-of-interest-challenges-and-solutions-in-business-law-medicine-and-public-policy/oclc/939111700

Covering Yourself? Journalists and the Bowl Championship Series

This case study examines the conflict of interest that arose from the Bowl Championship Series’ use of news media polls to create their team matchups. News outlets claimed that they could not fairly report sports news if their polls were used to create the news. The full case study, additional resources, and discussion questions can be accessed through the link below, which will open a new tab at The Texas Program in Sports & Media website.

The full case study, discussion questions, and additional resources can be accessed through the link below, which will open a new tab at The Texas Program in Sports & Media website.

Full TPSM Case: Covering Yourself? Journalists and the Bowl Championship Series

Teaching Notes

This video introduces the behavioral ethics bias known as conflict of interest. A conflict of interest arises when we have incentives and responsibilities in our personal and professional lives that are at odds and cause harm to others and to society. Conflicts of interest can appear in a variety of contexts and for many different reasons. For example, we may fail to see the ethical dimensions of a decision depending on the “role” we’re playing at work or in our broader lives. Or, the way in which we “frame” a situation may omit or obscure a conflict of interest. Or, a potential conflict of interest can lead us to develop incentives that “game the system.”

To learn about related behavioral ethics concepts, watch Ethical Fading, Framing, Incentive Gaming, and Role Morality.

The case studies on this page explore the legal and ethical ramifications of conflict of interest in politics and sports media. “Cheney v. U.S. District Court” illustrates a controversial court case where Justice Scalia’s personal friendship with Vice President Cheney presents a possible conflict of interest. “Covering Yourself? Journalists and the Bowl Championship Series” examines whether news outlets covering a Bowl Championship Series can fairly report sports news if their own polls are used to create the news. “Negotiating Bankruptcy” presents a case study focusing on conflict of interest in a business context.

Terms defined in our ethics glossary that are related to the video and case studies include: behavioral ethics, bounded ethicality, conformity bias, moral emotions, moral equilibrium, moral reasoning, and obedience to authority.

Behavioral ethics draws upon behavioral psychology, cognitive science, evolutionary biology, and related disciplines to determine how and why people make the ethical and unethical decisions that they do. Much behavioral ethics research addresses the question of why good people do bad things. Many behavioral ethics concepts are explored in detail in Concepts Unwrapped, as well as in the video case study In It to Win: The Jack Abramoff Story. Anyone who watches all (or even a good part) of these videos will have a solid introduction to behavioral ethics.

Additional Resources

Ariely, Dan. 2012. The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves. New York: HarperCollins Publishers.

Brawley, Otis Webb, and Paul Goldberg. 2011. How We Do Harm: A Doctor Breaks Ranks about being Sick in America. New York: St. Martin’s Press.

De Cremer, David (Editor). 2009. Psychological Perspectives on Ethical Behavior and Decision Making. Charlotte, NC: Information Age Publishing.

McFadden, David W., Elizabeth Calvario, and Cynthis Graves. 2007. “The Devil Is in the Details: The Pharmaceutical Industry’s Use of Gifts to Physicians as Marketing Strategy.” Journal of Surgical Research 140 (1): 1-5.

Moore, Don A., Daylian M. Cain, George Loewenstein, and Max H. Bazerman (Editors). 2005. Conflicts of Interest: Challenges and Solutions in Business, Law, Medicine, and Public Policy. New York: Cambridge University Press.

For resources on teaching behavioral ethics, an article written by Ethics Unwrapped authors Minette Drumwright, Robert Prentice, and Cara Biasucci introduces key concepts in behavioral ethics and approaches to effective ethics instruction—including sample classroom assignments. The article, published in the Decision Sciences Journal of Innovative Education, may be downloaded here: “Behavioral Ethics and Teaching Ethical Decision Making.”

A detailed article by Robert Prentice with extensive resources for teaching behavioral ethics, published in Journal of Legal Studies Education, may be downloaded here: “Teaching Behavioral Ethics.”

An article by Robert Prentice discussing how behavioral ethics can improve the ethicality of human decision-making, published in the Notre Dame Journal of Law, Ethics & Public Policy, may be downloaded here: “Behavioral Ethics: Can It Help Lawyers (And Others) Be their Best Selves?

A dated but still serviceable introductory article about teaching behavioral ethics can be accessed through Google Scholar by searching: Prentice, Robert A. 2004. “Teaching Ethics, Heuristics, and Biases.” Journal of Business Ethics Education 1 (1): 57-74.

Transcript of Narration

Written and Narrated by

Lamar Pierce, Ph.D., M.S.
Department of Organization and Strategy
Olin Business School
Washington University in St. Louis

“Incentives are pervasive in every aspect of society. People are rewarded for taking certain actions, and not rewarded for taking others. Workers are paid for their effort and productivity, salespeople are paid for their sales, and small business owners are rewarded with profits for successful ventures. So long as these incentives are well-understood by everyone, they work reasonably well. They motivate effort, performance, and social welfare. But sometimes, individuals have incentives that conflict with their professional responsibilities, often in ways that are not transparent to the public or in their own minds. These conflicts of interest produce serious economic and social problems.

Conflicts of interest are pervasive in markets and in society, and can motivate professionals to act in ways that violate their responsibilities and hurt their client and employers. Doctors, for example, may face a conflict of interest when they are paid more for some procedures than for others. Their professional responsibility is to do what is best for a patient, but their financial incentive is not always aligned with this responsibility. If an oncologist profits from selling chemotherapy agents to their patients, and some agents are more expensive than others, this conflict becomes a problem. Most doctors would never think of profiting in ways that hurt their patients, but some may either consciously or subconsciously.

When there are conflicts of interest, you can almost guarantee that they will at least sometimes lead to bad outcomes. Surprisingly, in many states, real estate agents can represent both the buyer and the seller in a home transaction. The conflict in such transactions is clear. The agent could never have both parties’ best interests in mind, just as an attorney could never adequately represent both a plaintiff and defendant in civil lawsuit. Even professors face a conflict of interest when they’re designing courses that will be evaluated by students seeking high grades and low workload. If the professor is ultimately promoted based on their popularity with students, will they consider making the course a little bit easier?

The key implication is that managers and policy-makers must constantly evaluate whether professionals and employees might face incentives to act counter to their responsibility. Eliminating conflicts of interest is one of the simplest and most effective ways to reduce unethical behavior. But in order to do so, we must be willing to acknowledge that professional codes of conduct, like those followed by doctors, lawyers, accountants, and real estate agents, do not make people immune to these conflicts, and that these codes are rarely a justification for ignoring the likely outcomes that conflicts of interest create.”

 

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