A Powerful But Often Ignored Compliance Tool
November 25, 2019
Social norms play a major role in governing behavior. That’s something compliance officers need to keep in mind when they design ethics and compliance programs, according to Vera Cherepanova, writing on the FCPA blog. Research shows that unethical behavior is not the case of a few bad apples. It has more to do with the barrel in which they operate. Why? The answer lies in how we think. Nobel Laureate Daniel Kahneman has developed the concept of System 1 and System 2 thinking. System 1 is intuitive: rapid, largely automatic, and driven by processes including habit, emotion, and social influence. System 2 is slow, conscious, reflective, and resembles what we think of as rational choice. We use System 1 as a tool for the vast majority of decisions we make, and these fast and automatic processes shape our lives in subtler ways than we appreciate. It renders us susceptible to cognitive biases including status quo bias (gravitating towards the familiar), loss aversion (preferring to avoid losses rather than to acquire equivalent gains) and intuitive rules of thumb. Therefore, the environment we’re in plays a significant role in shaping decisions and choices. This underscores the importance of the context and environment in which individuals operate. Behavioral interventions designed to leverage the influence of social environment have enormous potential and should be introduced to the compliance toolkit.
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