Blogs & Comment

Decision making, ethics and institutional design

There is too much focus in ethics on individual decision making.

I’m back from the University of Redlands, just outside of Los Angeles, where I spoke at the wonderful Banta Center for Business, Ethics and Society. The topic of my talk there was “Responsibilities in the Blogosphere,” but the key themes apply pretty directly to the world of business.

One is the tension between a focus on individual decision-making on one hand and a focus on institutional design on the other; that is, between a focus on individual responsibilities and a focus on how Internet giants like Google and Facebook construct online worlds that shape our behaviour.

I believe there’s too much focus in ethics on individual decision making. In fact, a focus on individual decision-making is kind of the default, both in philosophical ethics and in more applied areas. For many people, the key questions are general ones like, “How should I behave?” or “What factors should I take into consideration in ethical decision-making?”

And to be sure, that kind of focus makes for some great after-dinner speeches. The focus on the individual is empowering: “It all comes down to you.” “Your choices matter.” “We can do better, if each of us just changes how we think.” And so on. More than that, individual ethical dilemmas really do have a huge impact on individuals, and so it behooves those of us in the ethics biz to do something to offer some guidance. (One modest contribution of mine to this area is my Guide to Moral Decision Making.)

But there’s a real sense in which the focus on the individual is a distraction. Individuals will make the decisions they make, and those decisions will in large part be determined by forces that are a) psychological and cultural, and b) institutional.

So the real focus should be on institutional design, on devising institutions to foster the right kinds of behaviours. And I’m talking about institutions in the broadest sense, which includes not just corporate frameworks and governance structures, but also traditions, norms and social conventions.

Greater attention to institutional design is more than just a remedy to the excessive (and perhaps futile) attention paid to individual decision-making. It changes the way we frame discussion of ethics in that it makes it clear that business ethics isn’t just a microcosm of everyday ethics. It is instead a matter of using human ingenuity to build ways of doing things that suit the situation at hand: devising rules and norms that put reasonable constraints on human behaviour, to make sure that business stays mutually advantageous. But we’re not building entirely from scratch: rules and other normative institutions in the world of business still have to be understandable and applicable by the human beings who inhabit that world. The software, in other words, has to match the hardware.

Don’t get me wrong. I’m not against thinking about individual decision-making. I teach a course on critical thinking, and I think all of us can learn to think more critically about ethical issues in business to avoid certain well-known fallacious arguments, and so on. But the emphasis on design helps makes clear that ethics in business is a realm for innovation, and isn’t just a matter of importing into the world of commerce the values you learned at your mother’s knee.