Why good people do bad things is probably the most important and most bedeviling question in business ethics. Many people have theories, and they often tread much the same ground.
Here at Ethics Unwrapped, we focus on behavioral ethics, examining the psychology of ethical decision making. We stress the social and organizational pressures (e.g., obedience-to-authority and the conformity bias), the cognitive heuristics and biases (e.g., the overconfidence bias, the self-serving bias, in-group/out-group bias, framing, role morality, loss aversion, the tangible & the abstract, ethical fading), and various situational factors (e.g., time pressure, fatigue, self-control depletion) that can all contribute to making a good person choose to do things that, in hindsight, they will be able to clearly see were wrong. (We have videos on all of these topics. See links below.)
This issue also plagued the late Albert Bandura, who pondered: “How People Do Harm and Live with Themselves.” His overarching concept was “moral disengagement,” mechanisms that enable people to selectively disconnect their moral self-sanctions (i.e., their conscience) from their wrongful actions. (See our video at https://ethicsunwrapped.utexas.edu/glossary/moral-disengagement). Bandura’s explanations and ours have much in common, though we often use different terminology.
The most recent entrant into the “why do good people do bad things” sweepstakes is Guido Palazzo & Ulrich Hoffrage’s The Dark Pattern: The Hidden Dynamics of Corporate Scandals (2025). Their approach overlaps broadly with both Bandura’s (whose “moral disengagement” concept they summarize on pp. 29-33) and ours, in that their book is filled with references to common behavioral ethics concepts, many of which we have captured in our videos (e.g., ethical fading, cognitive dissonance, the fundamental attribution error, groupthink, the slippery slope (which we call incrementalism), and the illusion of superiority (which we call the overconfidence bias).
Palazzo and Hoffrage’s core message, with which we strongly agree, is:
“too often, our behavior is strongly influenced by a context that promotes unethical decisions and makes ethical behavior more difficult. It distorts the perception of reality in a way that people are numbed to all the warning signals as they slide down the slippery slope.” (p. 249)
They support their approach “though a mix of psychological research, case reports, and organizational anecdotes that explain why individuals—and entire organizations—fall over the moral cliff.” (p. 5)
Through their research, the authors believe they have detected nine “building blocks of a context that can make ethical dimensions disappear from the radar screen of decision-makers.” (p. 5) The key parts of the book are their explanation of these nine building blocks and their explication of seven corporate scandals that the authors believe were caused by them.
Building block #1 is “rigid ideology.” The notion here is that the corporate actors may become so focused on a narrow ideology or goal—for example, profit maximization or market dominance—that they lose sight of the ethical implications of their decisions. We call this “ethical fading” and it is definitely a thing to be avoided by good folks who wish to do good.
Building block #2 is “toxic leadership.” In some corporations, leaders are Machiavellian or psychopathic and corporate minions may follow their lead. We would emphasize that while there are such bad actors in corporate leadership positions, even normal leaders who want to do the right thing can make poor moral choices. The better place to focus is upon the obedience to authority tendency that we all have to follow our leaders even when we know in our guts that they are asking us to do things that are wrongful.
Building block #3 is “manipulative language,” which can distort people’s views of the issues before them. Following Bandura, we use the term “euphemistic language” for wording people use to hide from themselves and others the unethical implications of their words and deeds.
“Corrupting goals” make up building block #4. The idea here is that companies set production goals for their employees that are so unrealistically demanding that the employees have no other choice but to cheat if they are to meet those goals. Palazzo and Hoffrage illustrate this concept with the best example we can think of—the Wells Fargo Bank scandal, where management set sales targets so high that employees had no choice but to defraud their customers if they were to meet them.
Building block #5 is “destructive incentives,” which is closely related to “corrupting goals.” Two ways to strongly encourage employees to cheat are to give them impossible production targets (corrupting goals) and to pay them large amounts to reach such targets (destructive incentives). Enron’s insanely high bonuses and “rank-and-yank” employee evaluation system constitute one of the strongest examples of destructive incentives that we know of.
“Ambiguous rules” constitute building block #6. Most people want to do the right thing and are more likely to do the wrong thing if they are incentivized to do so (perhaps by corrupting goals or destructive incentives) in a setting where the rules are unclear and they can plausibly tell themselves that what they are doing is permissible. Enron’s leaders constantly argued that the applicable accounting rules were unclear, so they weren’t morally responsible for repeatedly producing financial statements that bore little relationship to reality.
Building block #7 is “perceived unfairness.” Palazzo and Hoffrage suggest that such a situation “can lead people to engage in illegal practices while feeling that they are restoring justice.” A classic example is a rationalization called “metaphor of the ledger” which, according to Professor Anand and his colleagues, involves us telling ourselves that we are “entitled to indulge in deviant behaviors because of [our] accrued credits (time and effort) in our job.” In other words, because we believe we have been underpaid or otherwise mistreated by our employers, then we feel it permissible to, for example, pad our expense account or take office supplies home for personal use.
“Dangerous groups” make up building block #8. The idea here is that when certain insiders wish to do something dishonest, others may go along because of the conformity bias (our tendency to take our cues as to how to act from those around us), perhaps reinforced by the in-group/out-group bias.
The final building block, #9, is the “slippery slope,” what we at Ethics Unwrapped call incrementalism. This concept is self-explanatory (though you can always watch our video if you’d like it explained).
After spelling out the nine building blocks of the Dark Pattern, Palazzo and Hoffrage illustrate them by describing seven recent major business scandals where these building blocks seem to have had influence—Theranos, Uber, Wells Fargo, France Télécom, Boeing, Volkswagen, and Foxconn. Despite subtle promises to the contrary, the authors don’t add much to what is already well known by those who have read the relevant books on these scandals, such as John Carreyrou’s book on Theranos and Jack Ewing’s on Volkswagen.
The authors wrap up with a “solutions” chapter. Because those who teach and study ethics are always pleased to run across positive suggestions for how to improve ethical behavior, we will explore these solutions in Part Two of this blog entry.
Resources
Vikas Anand et al., “Business as usual: The Acceptance and Perpetuation of Corruption in Organizations,” Academy of Management Executive, Vol. 18, No. 2 (2004), pp. 39-55.
Albert Bandura, Moral Disengagement: How People Do Harm and Live with Themselves (2016).
Cara Biasucci & Robert Prentice, Behavioral Ethics in Practice: Why We Sometimes Make the Wrong Decisions (2021).
John Carreyrou, Bad Blood: Secrets and Lies in a Silicon Valley Startup.
Jack Ewing, Faster, Higher, Farther: The Volkswagen Scandal (2017).
Mike Isaac, Super Pumped: The Battle for Uber (2019).
Bethany McLean & Peter Elkind, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (2003).
Guido Palazzo & Ulrich Hoffrage, The Dark Pattern: The Hidden Dynamics of Corporate Scandals (2025).
Guido Palazzo et al., “Ethical Blindness,” Journal of Business Ethics Vol. 109, No. 3 (2012), pp. 323-338.
Robert A. Prentice, Enron: A Brief Behavioral Autopsy, American Business Law Journal Vol. 4 (2003), pp. 417-444.
Peter Robison, Flying Blind: The 737 MAX Tragedy and the Fall of Boeing (2021).
Videos:
Behavioral ethics: https://ethicsunwrapped.utexas.edu/glossary/behavioral-ethics
Cognitive Dissonance: https://ethicsunwrapped.utexas.edu/video/cognitive-dissonance
Ethical Fading: https://ethicsunwrapped.utexas.edu/video/ethical-fading
Framing: https://ethicsunwrapped.utexas.edu/video/framing
Fundamental Attribution Error: https://ethicsunwrapped.utexas.edu/video/fundamental-attribution-error
Groupthink: https://ethicsunwrapped.utexas.edu/glossary/groupthink
In-group/Out-group Bias: https://ethicsunwrapped.utexas.edu/glossary/in-group-out-group
Loss Aversion: https://ethicsunwrapped.utexas.edu/video/loss-aversion
Obedience to Authority: https://ethicsunwrapped.utexas.edu/video/obedience-to-authority
Overconfidence Bias: https://ethicsunwrapped.utexas.edu/video/overconfidence-bias
Rationalizations: https://ethicsunwrapped.utexas.edu/glossary/rationalizations
Role Morality: https://ethicsunwrapped.utexas.edu/video/role-morality
Self-serving Bias: https://ethicsunwrapped.utexas.edu/video/self-serving-bias
Tangible & Abstract: https://ethicsunwrapped.utexas.edu/video/tangible-abstract