An article in the Boston Globe describes some new research by Daylian Cain, George Loewenstein, and Don Moore, looking at the effects on conflict of interest disclosures on expert advice.
In just about any profession– medicine or real estate, accounting or academia– people giving information and advice may carry agendas that bias their judgments, or find themselves in situations where duty and personal benefit clash….
One of the most popular– and least costly– solutions is disclosure. The notion is that requiring experts to put everything on the table should give them an incentive to behave ethically and avoid tarnishing their reputation: Transparency begets honesty. But work by Cain, in collaboration with Don Moore at the University of California Berkeley and George Loewenstein at Carnegie Mellon University, finds that disclosure can have the opposite effect….
By assuming that disclosure is always a benefit, he and his colleagues argue, regulators may be failing to address the real problems caused by conflicts of interest. In fact, biases are rooted deep in our psychology, and can’t be dispelled with a simple confession. Policies of disclosure, far from being a panacea, may be drawing attention away from the much harder work of removing conflicts and making sure that people’s advice and their interests align.
The experiment itself was pretty straightforward:
Cain, Loewenstein, and Moore conducted a series of experiments meant to mimic a situation in which a person in authority– such as a doctor, consultant, or real estate broker– is giving advice that influences another person’s decision. Certain study participants were required to make an estimate– evaluating the prices of houses, for instance. Meanwhile, other participants were selected to serve as experts: They were given additional information with which to advise the estimators. When these experts were put in a conflicted situation– they were paid according to how high the estimator guessed– they gave worse advice than if they were paid according to the accuracy of the estimate.
No surprise there: People with a conflict gave biased advice to benefit themselves. But the twist came when the researchers required the experts to disclose this conflict to the people they were advising. Instead of the transparency encouraging more responsible behavior in the experts, it actually caused them to inflate their numbers even more. In other words, disclosing the conflict of interest– far from being a solution– actually made advisers act in a more self-serving way.
"We call it moral licensing," Moore says. "After having behaved honestly and virtuously, you then feel licensed to indulge in being a little bit bad."… [I]t appeared that disclosing a conflict of interest gave people a green light to behave unethically, as if they were absolved from having to consider others’ interests…. In effect, what the experts were doing was passing the buck on managing their bias to the people they were advising.