Stick to rules. If you can reason, reason less and if you can't, do the same

This piece isn't a call for blind obedience, as the title might seem to suggest. This is a call for a better use of reason. The use of reason that recognizes its own limits, in the best of liberal tradition. This is a call for more humility, my proposed virtue of the year.

A recent paper by Bahnik, Hudik, Houdek, and Say, "Understanding Appointment Decisions: Do Material Interests Trump the Ethical Imperatives?", suggests that even otherwise honest people tend to accept dishonest team members when they benefit from their cheating. Or, actually, it depends… and this ambiguity is what I want to talk about.

Sometimes, the same people facing the same material incentives observe rules, and sometimes they don‘t. That’s a fact. "Don't steal" is a rule; "steal a gun from a potential mass shooter" is a decision that violates the rule but may be based on a sound moral judgment. We often make such decisions, believing they serve a greater good.?

Yet, if we can know the greater good, why do we need rules in the first place? The answer lies in the limits of our practical reason. Rules help us economize on the knowledge required to make sound moral decisions. Instead of analyzing every situation in depth, we can rely on established principles that condense the wisdom of the past.?

Thus, we have (at least) two mechanisms guiding our actions: one knowledge-intensive and possibly accurate, the other cheap but imprecise. Ideally, we should be able to strike the right balance between the two. Ideally. My daily experience suggests that the balance has tipped too far toward individual judgment. Rules have fallen out of fashion, at least in my bubble.

The Bahnik et al. paper provides a nice illustration of the problem. For my purposes, it suffices to point out that participants played a dice prediction game where they could cheat (lie) in some scenarios. In later rounds, they formed small teams and voted on who should play the cheating-enabled version of the game, knowing how participants had cheated in previous rounds. There were two scenarios where the whole team benefited from cheating. The difference was the source of the funds: either a charity or the experimenter (with no further details provided).?

When the money came from the experimenter, even honest people wanted to have cheaters on board. However, when the money came from a charity, people were much more reluctant to vote for cheaters. The rule "don't lie, don't cheat" was applicable in both cases; the potential material benefits were the same, yet the participants still decided differently.?

If I put myself in the players’ shoes, I can imagine how such decisions might be justified. "We are a team of good people," they might reason, "and if we get the money, we will promote a good cause. The money is equally distributed and not taken from any legitimate owner; no justice is violated; there is no victim. The money is a 'free lunch,' or so it seems."?

It does not seem difficult to rationalize accepting the rule violation—unlike the case where the money is taken from a charity. That situation feels different. It is violating justice; there is a victim of our behavior, the charity, we are taking what is not ours. In that case, our judgment naturally points in the same direction as the rule and that is exactly what the researchers observed.?

Again, I imagine honest people who voted for the cheater in the first scenario had little doubt about their judgment. They believed their judgment justified overriding the general rule. But did it?

Didn't they fall victim to what Adam Smith in the Theory of Moral Sentiments (TMS) called self-deceit, the "fatal weakness of mankind, … the source of half the disorders of human life," (TMS, III.iv.vi). Was it not a trap that lured them into believing that what they originally saw as cheating was actually not?

Smith devotes the beginning of the TMS to explaining the mechanism of moral judgment only to follow with a warning on its limits:

"None but those of the happiest mould are capable of suiting, with exact justness, their sentiments and behaviour to the smallest difference of situation, and of acting upon all occasions with the most delicate and accurate propriety. The coarse clay of which the bulk of mankind are formed, cannot be wrought up to such perfection. There is scarce any man, however, who by discipline, education, and example, may not be so impressed with a regard to general rules, as to act upon almost every occasion?with tolerable decency, and through the whole of his life to avoid any considerable degree of blame." ?(TMS III.v.i) ?

While everyone can learn the general rules and, on most occasions, act right, only a few people, whom Smith calls in a slightly different context "the men of reflection and speculation," (TMS IV.ii.xi) can consistently make sound moral judgments. For Smith, the sense of duty, the respect for general rules, is "the only principle by which the bulk of mankind are capable of directing their actions" (TMS III.v.i.). The point I am trying to make is that the bulk of mankind is you and me, not some abstract "them." It is us who need more humility.

In my business ethics class, I observe tendency to rely on individual judgment regularly in different contexts. Let me offer a non-business example. Would you violate the speeding limit in your small town when returning at night with expectedly no traffic and no pedestrians around? My students tend to say yes, my neighbors, too. Yes, to violating a rule they understand and consider valid. For them, it's an exception; they identify other considerations in their moral judgment that trump the simple rule. You too?

If so, I suggest you should give it a second thought. Rules are imperfect and may lead us astray. But they exist because they greatly economize on the knowledge required to make the right decision. With rules, we need not identify and assess every consequence of our action; we need not elevate ourselves to the position of the impartial spectator to judge our actions from a perfectly unbiased perspective. We simply obey the rule and can be quite confident that we are taking the best course of action. This is the beauty and function of rules, they capture the potentially unseen, unknown, incomprehensible.

Returning to my examples, consider the dice game. Are we really sure the money isn't taken from anyone? Just because we don't know its origin doesn't mean there isn't a hidden victim. And what about the speeding example? Are we certain there are no pedestrians lurking in the shadows? Even if we don't see them, might they not be there? And what if other drivers, using the same logic, are speeding recklessly, assuming everyone else will be slow and predictable inevitably leading to an accident? Isn't our seemingly prudent decision actually a mask for selfishness—prioritizing our convenience over others?

Or consider this: What if onboarding a colleague who is willing to lie, even for the team's benefit, has unforeseen consequences down the road? Might this person be more likely to lie when it isn't for the team's benefit, perhaps at the team's expense? Might their dishonesty corrupt the team culture, eroding trust and hindering effective collaboration? And what about our own integrity? Does the extra money really mean more to me than seeing myself as a person who does not cheat?

I could go on, but the point should be clear now. The mechanism of moral judgment is not an easy exercise and requires an enormous degree of self-command and knowledge, which is often out of our reach, even in simple situations.

With great power comes great responsibility

Which brings me to my second point. If our ability to accurately assess context, motives, and future consequences is limited even in simple situations, how can we hope to succeed with decisions taken with great power in business or politics? I suspect we often cannot. The more we circle outward from what we know, the more resources we command, the more humility we need. Do you believe the election outcomes will lead to hell on Earth? Are you deeply concerned about a court decision that challenges your sense of justice? Before rushing to social media with what you believe to be your Infallible moral judgment to call for breaking the established rules, pause and reflect.

Rules are not perfect. Smith himself knew that many rules are loose, vague, and indeterminate, and that they must be adapted in action. Don't get me wrong. Moral judgment is key to a good life and good society. And tweaking, reinterpreting, and adapting the rules is a source of institutional innovation, which, as Deirdre McCloskey convincingly points out, was at the heart of the emergence of the modern world, with its longer life expectancy, negligible child mortality, less work, and more free time. My argument is at the margin. I simply see too much hubris around me and feel that humility deserves a boost.

The basic problem with rules is the source of their power. Smith shows in the TMS how religion historically played a critical role; he speaks of "sacred rules of virtue." But in my WEIRD bubble, this does not resonate. Here, reliance on individual judgment seems particularly prevalent, and arguments from tradition or authority are often dismissed. The "why" question—the insistence on understanding the reason behind rules—has eroded the unquestioning acceptance of traditional authority. People want to know the function of rules. So, what's left if not religion?

It is reason, but humble reason, the kind of reason championed by classical liberalism. The same principle of intellectual humility which drove the inquiry into the complex system of the division of labor and led the brightest minds to conclude that even though the economic system may appear imperfect, we should be cautious about attempts to redesign it. "Hands off" is the rule; tweak only if you are really sure you do no harm. In classical political economy, the laissez-faire doctrine was not a resignation on reason, but rather its triumph—reason's understanding of its own limits.

Hayek captured this eloquently in The Fatal Conceit, where he warned against the hubris of those who believe they can outsmart the markets: “The most dangerous person on earth is the arrogant intellectual who lacks the humility necessary to see that society needs no masters and cannot be planned from the top down.”

A similar warning applies to our individual moral judgments. Let us, therefore, tame our arrogance and give the general rules a chance. This is not a resignation on practical rationality. It is not reliance on prejudices or dogmatic heritage; it should be viewed as a triumph of practical reason. In short, humility in the face of complexity, both in markets and in morals, is not a weakness, but a strength.