Basically, what they did was ask subjects to give advice on financial transactions. In some cases, there were financial incentives to make the advised price as high (for the seller) or low (for the buyer) as possible. Then they offered these same individuals a financial reward for giving their true estimate of the value. This last part was done in private so they wouldn't feel obligated to continue their exaggerations to avoid looking like liars. What they found was:
- after exaggerating to the low side, their "true" opinions were still too low (although not quite as much as their exaggerations). They couldn't ignore what they had said previously, even though they knew they were exaggerating and were being paid extra for being accurate this time.
- after exaggerating to the high side, their "true" opinions were still too high. Same thing.
- they admitted that they were probably influenced by their previous advise, but significantly underestimated the actual impact.
The authors discuss the implications here for financial regulations. Create big fines or strong regulations can't work if the auditor or broker doesn't even realize they are giving bad advice because of these unconscious influences. The only way would be to prevent the original conflicts. Auditing would have to be completely separate from advising. Brokers would not be allowed to work on any kind of volume commissions.
There are also implications in many other industries - legal, education, etc.