Monday, October 23, 2006

conflicts of interest

Disclosure is clearly not the answer to conflicts of interest. A 2005 study in the Journal of Legal Studies (recently cited at Business Week) found that when someone discloses a conflict of interest, they are more likely to exaggerate their position. And those who receive the disclosure do not add the grain of salt they should. So the practical implication is that you should admit to any conflicts without worrying about consequences and then feel free to make up whatever you want (yes, I am exaggerating here !!!).

So what does human factors say about this? My sense is that when making any point, there are two competing incentives - personal payoff, which has high salience and strong low-brain instinctive connections, and ethics, which is more deep-brain connected. And recent studies have shown that short term decisions are made more by the emotional than the rational brain areas. So when speaking or presenting, the payoff connections will be activated first and any excuse to use them will overcome the rational ethics of being completely honest. Not that experts would lie, but exaggerating is easy to rationalize when it is based on truth.

But perhaps for long term discussion with long term payoff (writing journal papers) we are better at being rational and can be more honest. That is a study that still needs to be done.