Fairness And Ethical Decision Making

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The supply of demand can affect prices for items in the market, but will raising the price of a product cause future loses for the company? Both fairness and ethics are important to include in your decision making, even in business decisions. Fairness may dominate economically rational choices in our decisions, and is usually inconsistent with economic models. For example, if a store increases the price of snow shovels after a storm or a generator after a hurricane; the business that acts economically and rational may lose future business due to the fact many people will consider this act unfair. Stores that consider the norms of fairness will may have future profits because customers may punish retailers for perceived unfair decisions.
Fairness judgments seem to be affected by framing. For example, if a company making a small profit and is located in a community experiencing a recession and unemployment without inflation, yet cuts wages by 7%, about 62% of people polled thought this was unfair. However, a company with the same scenario, except they have 12% inflation and increase wages by 5%; only 22% thought this was unfair. We believe the rule of wages must go up not down. The money illusion tends to make us rely on nominal quantities instead of real value or purchasing power. Consumers grant special status to the manufacturer’s list price, even though we do not expect to pay that price. The list price acts like an anchor for assessments of fairness, and paying above list price is unexceptable. There are several documents stating consumer’s emotions not market forces decide what is fair. Unfair ultimatums like in the airplane story, suggest it would be easy to turn down a hundred dollars because someone else would gain $4,900. Most people would reject the unfair offer by Mark as fairness tends to dictate our decisions. If you are unaffected by fairness you would accept the hundred dollars. We play the game everyday when we shop. You buy the product you want at their price or you don’t. In the dictator game when acceptance of the deal by the other party was not required, 64% still gave the other party some portion of the resources. Pay what you want pricing may be more profitable than a normal pricing scheme especially when some of the proceeds will go to charity out of a sense of obligation. Studies of the ultimatum game in 15 societies found fairness an important factor in economic games; however, fairness is universal but cultural norms depends how fairness is implemented. Humans care about others and how their own rewards compare to others. This is why companies create elaborate grade systems to compensate employees. Salaries, bonuses, and benefits are calculated so employees feel fairly compensated to others in similar positions. Research shows a positive correlation between pay equity of corporations and the quality of their products. Wages are based on profitability of a given firm and what other individuals in closely related jobs can earn. Ethical issues affect how we judge our own behavior that are inconsistent with our own preferred ethics. Bounded ethicality is the psychological process that leads people to act opposite of their personal ethics. Bounded ethics comes into play when executives make decisions that harms others but is also inconsistent with his or hers conscious beliefs. These biases apply to all of us, even the most intelligent. These biases occur beyond conscious awareness. Overclaiming credit is rooted from self serving biases. Even honest people believe they contribute more to an enterprise than they actually do. Joint ventures often end in disappointment because in a partnership, both parties are skeptical of the other side and give mediocre talent to joint projects saving their best
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Unconscious attitudes effects our judgements and limits the degree that our behavior is representative of our ethical values. Many of us are surprised to learn we have little control over our attitudes regarding race, gender, age and so on. Implicit attitudes are rooted in ordinary mental processes of categorization, perception, memory, and judgment otherwise known as ordinary prejudice. Implicit attitudes are more likely to occur in System 1 thinking. As more members of stigmatized groups succeed in high status positions, the less prejudice society will

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