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Capitalism's Role In Unethical Behavior Essay

1281 words - 5 pages

Ethical Business PracticeA central tenet of this paper is that the purchase behavior of unsophisticated consumers in the market, if left unprotected, will ultimately become a catalyst for unscrupulous and unethical business practices. Increased unethical behavior is inevitable because lack of sophistication in a laissez-faire economy can create a marketplace that rewards unethical business practice and penalizes ethical business behavior. To understand the mechanics of a marketplace void of sophisticated consumer behavior, it is instructive to examine a well-known framework commonly referred to as the "prisoner's dilemma."The prisoner's dilemmaThe "prisoner's dilemma" belongs to a branch of mathematics, known as game theory. It provides explanatory frameworks for understanding competitive behavior under conditions of limited information (Axelrod 1984; Fader and Hanser 1988). As originally conceived, the dilemma involves two criminals being held in separate cells awaiting trial. The district attorney has sufficient evidence to convict both of minor crimes, but the criminals are believed to be guilty of a more serious offense. Unfortunately, the evidence is not sufficient to gain a conviction on the more serious offense without a confession from one or both of the prisoners. Therefore, the district attorney, who possesses a significant amount of knowledge, experience, and expertise with respect to criminal justice and behavior (i.e., sophistication), creates the necessary conditions to obtain the desired confession. The district attorney informs each prisoner that if both confess to the more serious offense, a reduced sentence of five years will be recommended, however, if only one of the prisoners confesses, then the recommendation will be that the confessor receives a token sentence of 90 days and the nonconfessor a full ten years. If neither prisoner confesses, each will be convicted of the minor crime and sentenced to two years in prison. What should each prisoner do?Consider the two options provided by the district attorney to each prisoner and the consequences. The best overall outcome is for both prisoners to remain silent. However, each prisoner could enhance their individual outcome by confessing, provided both do not confess. To achieve this outcome requires that each prisoner trust the other to behave for the common good rather than pursue his/her own self-interest. If both prisoners confess, the worst overall outcome results and each goes to jail for five years. This is called the prisoner's dilemma: mutual cooperation produces a desirable result, while the pursuit of self-interest gives rise to an undesirable result. In this scenario, the dominant strategy tends to be confession over silence because the actions of the district attorney create the proper incentive to gain the desired behavioral result (confession).The corporate dilemmaAnalogously, the behavior of consumers in the marketplace also creates incentives that direct the...

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