Warren Watch: Ethical 'blind spots'

Author: Steve Jordon

Conflicts of interest cause ethical “blind spots” that let people overlook misdeeds, a pair of professors wrote for the Harvard Business Review, citing the stock-trading episode involving former Berkshire Hathaway executive David Sokol and his boss, Warren Buffett.

Professors Max Bazerman of the Harvard Business School and Ann Tenbrunsel of the University of Notre Dame wrote that Berkshire chairman and CEO Buffett “failed to understand the unethicality of Sokol's actions when he learned of them and intervene.”

“Mounting research shows that we often fail to notice others' unethical behavior if it's in our interest not to notice,” they said. “This failure of oversight — called ‘motivated blindness' — is unconscious and common. When Sokol told Buffett that he owned stock in Lubrizol, Buffett probably didn't consciously ignore the warning signs; he didn't see them at all.”

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