How Corporate Puppet Masters Benefit from Our Bias

Puppet

Image by Newsbie Pixvia Flickr

Consider this scenario (based on actual events): A major pharmaceutical company that manufacturers drugs for cancer patients decides to sell the rights to market the drugs to a smaller company. The smaller company then raises the price of the drugs from $160 to $1100 — a massive increase for users of the drugs, many of whom are dependent on them to survive.

The price increase has nothing to do with an increase in costs to make the drugs, because the larger company still manufacturers them at the same cost as it always did.

It’s not clear how or if the larger company directly benefited from the price increase, but it is likely that it knew the smaller company would raise the price. If so, then it’s likely that the larger company benefited at least indirectly from the price increase, either via an inflated original sale price to the smaller company or through a revenue increase to manufacture the drugs.

Were the actions of the larger company ethical? 

Most people reading that scenario would say that the larger company’s actions were unethical because it probably knew that the price would increase, and that the increase would be a hardship for users of the drugs, but it still sold the rights to sell the drugs and likely benefited in some way.

But if you didn’t know all of the details of the story, would you still perceive the larger company’s actions as unethical, or would the indirect nature of those actions deflect blame?

That’s what a study published in the journal Organizational Behavior and Human Decision Processes investigated.  Study participants were presented with various scenarios involving a primary agent and an indirect agent (such as the major pharmaceutical company and the smaller one) and asked to rate the ethicality of their actions.  In some cases, the actions were taken by just one of the parties, and in other cases they were taken by both parties, with one acting “behind” the actions of the other.  Four experiments were conducted in total.

The results looked like this: 

Study participants rated direct agency as more unethical than indirect agency.

Even when the primary agent is in control of the indirect agent’s actions, the mere existence of a secondary agent creates a perception of diffused responsibility (that is, even when the primary agent is completely in charge, the secondary agent will get blamed for being involved).

Indirect agency is considered unethical only when it signals lack of foreknowledge or control on the part of the primary agent.

All of which is to say, the big dog behind the scenes either escapes blame or at least benefits from the perception that it only shares in part of the blame.

Why does this happen?  Researchers point to decision bias as the culprit.  People rely on implicit ‘rules of thumb’ to make judgments in everyday life–such as figuring out who is responsible for a given action. The problem is that those rules of thumb (as demonstrated by Nobel-prize winning psychologist Daniel Kahneman among others) are often riddled with biases, resulting in big-time errors. 

The bottom line: we’re biased toward laying blame on the most obvious suspect and don’t automatically consider the motives of agents who cause harm indirectly.  That’s good news for puppet masters with the resources to make sure their hands don’t get dirty, and bad news for their puppets who’ll likely suffer the public guillotine no matter what.

If you’re interested, here’s a great compilation of cognitive biases on Wikipedia.  

A version of this post was originally published on Neuronarrative

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