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Continued from previous page
Promises and Lies
How many times have we heard about an executive behaving
in an untrustworthy manner or even caught in an outright
lie? Can that individual ever regain trust? According
to Schweitzer in a new paper, "Promises and Lies: Restoring
Violated Trust," coauthored with his former PhD advisor
Professor John Hershey in the Operations and Information
Management Department, and Professor Eric Bradlow in the
Marketing Department, the answer is yes.
"A lot of people say that talk is cheap, but we've found
that people really do care about what you say after a rupture
of trust," he notes.
The authors reached their findings through an experimental
study in which people played a game where they trusted
another individual, then the trust was harmed, and attempts
were made to recover that trust. Schweitzer explains that people
were given $6 and then given the option of either keeping
the money or passing it to an anonymous partner, where
it would triple to $18 and then the partner could either split
the larger amount of money with them—or keep all of it
themselves. This game would be played with the same partner
at least seven times in a row.
"In the first round, would you pass the $6 to your partner?
You would if you trusted that he would return money to
you," says Schweitzer, noting that in the first round 90% of
people passed the $6, as there was no reason not to trust the
partner at that point.
However, after the first round, things became more complicated.
After people handed over the first $6, their partners
(who were really Schweitzer's research assistants) kept all of
the money, giving nothing back. They repeated this untrustworthy
behavior in the second round. After this, trust had
been severely damaged and most people of course kept the
$6 rather than risk losing it again.
So the trust recovery process kicked in on the third round.
"After that, I'd have the partner do one of four things: 1)
send an apology note; 2) send a promise to return the money;
3) send a note with both an apology and a promise; or 4)
send no message. Then, the partner would start behaving in
a trustworthy manner. Also, the test subjects would get to see
what the partner would have done in each round regardless
of how they chose to play. So if the test subject kept the $6,
he or she would still find out whether the partner would have
split the money or kept it all."
He continues, "We had a measure of how much the subjects
were willing to trust over time. This enabled us to compare
the trust recovery rates across different conditions. One
key part of this research was our focus on deception. In some
conditions, we had our research participants engage in deception
as well as behave in an untrustworthy way."
The findings were surprising: trust that is harmed by
untrustworthy behavior can be restored to initial levels.
However, trust that is harmed by untrustworthy behavior and
deception never fully recovers, as the deception causes enduring
harm to the trust.
He maintains that this is an important lesson for business
leaders. "If a CEO behaves in a way that is untrustworthy or
even just perceived as untrustworthy then it's important to know
that communication can help to restore trust. Maintaining credibility
in what you say is the key. For example, a CEO can make
a promise to change a course of action and this by itself can be
very effective in speeding trust recovery—as long as he hasn't
been caught lying in the past. That is, words can repair trust very
effectively, but people have to be able to believe the words."
Lie Detectors
While much of his research on deception and trust is in an experimental
setting, Schweitzer currently is working in the
field studying how insurance companies detect fraud. He has
conducted this work with another Wharton PhD graduate,
Danielle Warren, who is currently on the faculty at Rutgers.
The issue he's focusing on is the importance of interviews by
insurance investigators in detecting fraud.
"Most insurance companies have a lot of people who handle
claims, but surprisingly few people who actually investigate
potentially fraudulent claims. I'm looking at whether there is a
way to focus the attention of investigators," he explains.
Schweitzer notes that he is finding that in-person interviews
are a very important tool in detecting fraud even as investigators
increasingly rely upon database searches, physical evidence,
and sophisticated investigative techniques like accident reconstruction
and surveillance. "Unlike a lab environment, there is
a serious self-selection issue in the field where people who decide
to tell lies are making a personal choice to try to get more
money by using deception at the risk of getting caught. In this
setting, when the stakes are high, people might convey deception
by being particularly excited. Or, a claimant might try to
avoid an interview altogether. People who avoid interviews are
actually communicating a lot of information."
The message for insurance companies, according to
Schweitzer, is to keep investigators on the ground and make
sure they have strong interpersonal skills. "They might be
more expensive, but they are very valuable to the organization
from a detection and deterrent standpoint."
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