Bankers lie

Wall Street bankers cheat more when they think about their jobs—even when they’re not working

By Matt O'Brien

It turns out there's only one time bankers lie. That's whenever they think about their jobs.

That, at least, is what a new paper in Nature by Alain Cohn, Ernst Fehr, and André Maréchal found when they tried a simple experiment: asking bankers how many times a coin they flipped came up heads or tails. Well, it was a little more complicated than that. The researchers had 128 bankers toss a coin ten times, and then report how often it came up one way or the other. But they were told beforehand that they'd get $20 for every time it either came up heads or tails—it depended—as long as they had more got a heads or tail more often than another randomly selected person.

The idea was to mimic the bank bonus system, where it's not just about high-performance, but also out-performance.

There was one final wrinkle. Before they flipped their coins, some of the bankers were asked about their personal lives, like how many hours of T.V. they watch, while others were asked about their professional ones. Things like which bank they work at, and what exactly their job is.

It's what behavioral economists call "priming," and the idea is that making people think about different things might make them act differently too. And in this case it did. The bankers who were primed to think about non-work-related things said that just 51 percent of their coin flips were successful, right at random chance. But the ones who were primed to think about their bank job suspiciously said that 58 percent of their flips were successful. Either they were all very, very lucky, or some of them were stretching the truth quite a bit.

But why would thinking about working at a bank make bankers lie? Well, it didn't depend on what kind of work they did for the bank. Traders and HR execs were equally (dis)honest. It also wasn't about them being more competitive, or thinking that they had to lie because their co-workers would.

But most surprisingly, it even wasn't about the connection between banking and money. When the researchers primed some college students about the two, they were not significantly more likely to cheat than before. No, it's something more general than that. The only explanation that held up when the researchers tested it, unlike all these others, is that bankers are more materialistic when they're reminded that they're bankers.

So there's something about banking culture that makes people care so much about making a quick buck—even if it's just $200, like in the study—that they'll cheat to get it. Something, in other words, that tells them greed is good, and the rules are for suckers.

Gordon Gekko would approve.