Support 100 years of independent journalism.

  1. Science & Tech
4 July 2012

Bank like there’s no one watching

Martha Gill's Irrational Animals Column.

By Martha Gill

As Barclays prepares for an inquiry into its practices, 15 banks lined up behind it, Bob Diamond must be haunted by what he said at last year’s BBC Today business lecture: “Culture is difficult to define, I think it’s even more difficult to mandate – but for me the evidence of culture is how people behave when no one is watching.”

Well, we’re all watching now. Most of us are viewing with cynicism – with thoughts that sharp practice is fairly inevitable and that we’ll probably find more as the investigation unfolds. But perhaps we should all be more shocked. After all, we naturally treat others surprisingly fairly, even when given the power not to. What went so wrong here?
 
Here’s a classic experiment that might help – it’s known as the ultimatum game. In this game, you are given some money and one condition: you must share the money with another. If the other turns the money down, though, both of you lose it.
 
Now, the logical response to the condition is to offer your partner the smallest amount possible. They might be slightly annoyed, but at least they got something out of it. To the surprise of the economists who thought up the test, though, this is not what happened. Instead, subjects gave out far more money than they needed to.
 
What made them so generous? The researchers speculated that it was fear of rejection: they didn’t want to make the other person angry enough to walk away from the deal. 
 
But what happens when the respondent’s power of rejection is taken away? A slight change to the ultimatum game turns it into the dictator game. In this version partner can simply dictate how much the other receives. No fear of rejection here – the second partner must just take what they are offered. But here again, the experimenters were surprised – dictators turned out to be unnecessarily generous. 
 
What’s going on? It can’t just be the fear of being turned down. One explanation that fits is that people have a sense of fairness. We simply don’t want to act too selfishly. 
 

See no evil

 

But there was a way to change players’ commitment to fairness: isolation. When put in a separate room from their partners, with no access to their reaction, the dictators started handing out tiny amounts – the smallest they could get away with. The lethal combination of power and isolation seemed finally to put paid to their empathetic instincts. When no one was watching, they just didn’t care. 

Back to the bankers, then: we can’t expect people to act fairly or even legally if they are given a large amount of power in isolation from those affected by their decisions. We like to seem fair, but this only works with an audience. A culture where no one is watching is a culture doomed to corruption.
Select and enter your email address Quick and essential guide to domestic and global politics from the New Statesman's politics team. A weekly newsletter helping you fit together the pieces of the global economic slowdown. The New Statesman’s global affairs newsletter, every Monday and Friday. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Content from our partners
Building the business case for growth
“On supporting farmers, McDonald’s sets a high standard”
City of London Corporation brings stakeholders together to drive climate action
Topics in this article :