Liar!! Lying!!

An interesting study by the Harvard Business School, MIT, Princeton and Yale tried to unlock the human psyche of cheating. Being dishonest is actively used in some way, shape or form in the capital markets. Here, being dishonest does not mean performing an illegal act. It could simply mean trying to push the odd in ones favour by lying about price, information etc. That keeps the phenomenon of information asymmetry active and feeds it.

The study found that the risk of being caught does not change the level of dishonesty. On the other hand getting people to contemplate their own standards of honesty on religious or sentimental grounds prohibits them from lying to a large extent( For example reminding about a code of honesty, or the ten commandments or a religious text). The study also found that indulgence in an activity that indirectly relates to money tends to double the likelihood of cheating (Falsifying financial reports, fake deals etc.).

The findings tend to point in the direction of the regular practise of lying and misleading to control information flow in financial markets and how these practices at times are done unconsciously and as a reflex action driven by profit.

Pic Source: www.offthemark.com