Summary: Why do people lie?Most people like to think of themselves as basically honest. When they look at themselves in the mirror, they want the respect the man or woman looking back at them. So we all tend to think of ourselves as nicer than average, better-looking than average, and more truthful than average.Only it’s not that way.Several recent studies show that if people can cheat and get away with it—just a little bit—they tend to do so. Also, if it looks like most people in the group are cheating, we’re more likely to cheat ourselves. Some college students were given a set of math problems to solve by hand in a short amount of time and were paid a dollar per problem solved. When the time was up, they shredded their papers and then self-reported how many they did. After examining the papers—the “shredder” was a ploy—the researcher found most students exaggerated a little. Out of 30 test subjects, about 18 thousand lied a little, while a handful lied big-time.When the researcher “salted” the exam room with someone obviously cheating—who announced, “I’m done!” about two minutes into the test (which was designed so that no one could finish on time)—and who received the same payment as everyone else—the incidence of cheating went up. When others lie and get away with it, you can feel like a sap for sticking to the rules.Which brings us to Lance Armstrong. By his own confession, every one of his seven Tour de France victories was accomplished with a little help from performance enhancing drugs: steroids, painkillers, blood boosters, and so on. Because he denied using drugs—and aggressively attacked anyone who contradicted his denial—he has been banned from professional sports for life.But cycling has been especially fraught with doping scandals. Every pro sport—baseball, football, boxing—has had its share. In the last Tour de France, you had to go down to number 17 to find someone who was admittedly substance-free. The incentives seem too significant and the penalties too diffuse and distant for most athletes to resist. In spite of the health and reputational risks, the potential gain is too much to pass up.But Lance has now been skewered. That’s the risk of egregious cheating and serial denial. Lance Armstrong used to be an example of a generous, courageous cancer-survivor. Unfortunately, his name will become a byword for blood-doping shame.Douglas R. Tengdin, CFA Chief Investment OfficerFollow me on Twitter @GlobalMarketUpd
