In Part One of this blog post, we summarized the efforts of Guido Palazzo and Ulrich Hoffrage (professors of business ethics and decision theory, respectively) to explain why good people do bad things–an enduring question for those who study ethics–in their recent book The Dark Pattern: The Hidden Dynamics of Corporate Scandals (2025). We examined the nine “building blocks” that the authors believe are the factors that lead to most corporate scandals and noted the seven recent business scandals that the authors used to illustrate the real-world application of their theory.

What we did not do in the blog post, due to lack of space, was examine the book’s penultimate chapter where the authors describe a “bright pattern” that they believe will help business people create “ethically robust” firms. Because people who study and teach ethics are always on the lookout for advice regarding how to do things right, we’ve been asked to describe this “bright pattern” in a second blog entry. Here it is.

As noted, Palazzo and Hoffrage’s “dark pattern” of corporate scandals is composed of nine “building blocks”—nine mutually reinforcing factors that often lead well-intentioned corporate employees to screw up. The “bright pattern” is, essentially, nine concepts that are intended to be mirror images of the nine building blocks of the dark pattern. They are advice as to how to avoid the dark pattern that leads to scandal.

Dark pattern building block #1 is “rigid ideology,” which occurs when corporate leaders become so focused on philosophies of profit maximization, cost containment, market dominance, and the like that they completely ignore the ethical dimensions of the decisions they are making. Consequently, bright pattern #1 reminds these leaders of their “holistic responsibility.”

This “requires them to be as sensitive to their moral responsibility as they are to their profit responsibility.” [p. 223]

By constantly keeping in mind that they have obligations not just to shareholders but to other stakeholders as well—customers, employees, citizens, the environment, etc.—those who wish to do the right thing can keep ethics in their frame of reference when they make important decisions.

Dark pattern building block #2 is “toxic leadership.” A meaningful minority of corporate leaders are Machiavellian, psychopathic, or worse. When such people seize the reins of power, bad results often follow, particularly given people’s tendency to be obedient to authority. To push back against such festering leadership, firms should embrace bright pattern #2—”a speak-up culture.” Firms should encourage their employees to speak up when they see something wrong, train them to be effective in doing so, and protect them from punishment when they do. We advise those wishing to build a speak-up culture to study Mary Gentile’s Giving Voice to Values program. Read her book. Watch our videos  (https://ethicsunwrapped.utexas.edu/series/giving-voice-to-values).

Dark pattern building block #3 is “manipulative language,” which can distort people’s views of the problems before them. People tend to use euphemistic language in order to hide from themselves and others the unethical implications of their words and deeds. People are not fired, the company is just “right-sizing.” Accounting fraud is referred to as “earnings management.” And so forth. The bright pattern response, say Palazzo and Hoffrage, must be “moral conversations.” The notion is that managers by their words and deeds must make it clear to employees that doing the right thing counts, perhaps by making top managers’ bonuses dependent on ethics. Leaders must walk the talk.

“Corrupting goals” make up building block #4 of the dark pattern. When leaders establish unrealistic goals and quotas for their employees, they may leave them just one choice—cheat or be fired. Sensibly, the authors’ bright pattern #4 is “integrity goals.”  They recommend that firms emphasize “learning goals” (focusing on “the process of goal achievement and on improvement along the way”) over “outcome goals,” which look only at whether or not goals were met. As an example, they cite Siemens which, after being caught in a huge bribery scandal, changed its message to employees to: “don’t sell the future for instant profit.”

Building block #5 is “destructive incentives,” which constitute a second route to strongly incentivizing employees to cheat. An example would be the incredibly high bonuses that Enron paid top employees coupled with its “rank and yank” system of employee evaluation. Together, these policies created a strong incentive to cheat. The corresponding “bright pattern” concept is “constructive incentives.” Palazzo and Hoffrage favor the Zappo’s evaluation system where employees’ performance evaluations were 50% based on how employees contributed to the corporate culture, not just to short-run profits. At least it was so framed until Amazon purchased Zappos and shifted to more of an Enron model.

“Ambiguous rules” constitute building block #6 of the dark pattern. Correspondingly, “moral clarity” is the key to a more desirable bright pattern. When a company urges its employees to be honest but gives them production goals that can be met only by deceiving customers, the employees are being sent decidedly mixed messages. They face what “Palazzo and Hoffrage call “dilemma situations.” Moral clarity can be created by always emphasizing that honesty is the company’s top priority and that production goals must always take a back seat to integrity. They return to Siemens for guidance. Apparently, Siemens has established an ethical framework for its employees that emphasizes six ethical principles:

  • Integrity in transactions
  • Legal compliance
  • Human rights
  • Sustainable production
  • Occupational safety
  • The duty to “explore ethical concerns” [p. 238]

Dark pattern building block #7 is “perceived unfairness.” The curative bright pattern concept is, unsurprisingly, “organizational fairness.” The perceived unfairness example we often use here at Ethics Unwrapped 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 unfairly passed over for a promotion or in some other way been mistreated by our employers, then we may feel it permissible to, for example, request reimbursement for expenses that were actually personal in nature rather than incurred to advance our employer’s interest. Palazzo and Hoffrage believe, reasonably, that it’s best for employers to seek to always act with fairness in its three forms—distributive fairness (how resources, rewards, and punishments are distributed), procedural fairness (how employees perceive organizational processes), and interactional fairness (whether employees are treated with respect, empathy, and dignity).

“Dangerous groups” make up dark pattern building block #8. The authors give as an example the France Télécom scandal where the company created a “Lord of the Flies” type of atmosphere where to survive in the company many employees had to fire other employees. The authors say they are shocked by “the total lack of solidarity among colleagues” who worked for France Télécom, though they probably shouldn’t have been given the circumstances in which the employees found themselves. But just as bad behavior can be contagious because of the conformity bias, good behavior can be also. Palazzo and Hoffrage’s remedy in bright pattern #8 is creating “courageous upstanders.” The authors give several suggestions for measures firms can take not just to reward employees’ moral behavior, but to encourage a firm culture where employees actually stand up for one another rather than throwing each other under the proverbial bus.

The final building block of the dark pattern, is #9, the “slippery slope” (incrementalism). This slippery slope toward scandal can be combatted, the authors suggest, with a “virtuous circle.” Virtuous circles can be inspired by leaders who follow Clayton Christensen’s advice: “Decide what you stand for. And then stand for it all the time.” Someone who does the right thing when times are tough can serve as a role model for others who, in turn, can serve as a role model for yet others and the next thing you know you’ve got a virtuous circle.

We recommend Palazzo and Hoffrage’s book which contains no magic formulas but makes reasonable suggestions for how well-intentioned leaders can run their firms in an ethical manner.

 

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).

Clayton Christensen, “How Will You Measure Your Life? Harvard Business School Working Knowledge, May 9, 2012, at https://www.truevaluemetrics.org/DBpdfs/Ideas/Christensen/How-will-you-measure-your-life.pdf.

Mary Gentile,  Giving Voice to Values: How to Speak Your Mind when You know What’s Right (2010).

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.

 

Videos:

Conformity Bias: https://ethicsunwrapped.utexas.edu/video/conformity-bias.

Framing: https://ethicsunwrapped.utexas.edu/video/framing.

Giving Voice to Values: https://ethicsunwrapped.utexas.edu/series/giving-voice-to-values.

Incrementalism: https://ethicsunwrapped.utexas.edu/video/incrementalism.

Obedience to Authority: https://ethicsunwrapped.utexas.edu/video/obedience-to-authority.