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Barclays Libor scandal: Is truth an easy casualty in the digital age?

Barclays bank was caught manipulating global interest rates, known as Libor, in an act of deception over the bank's financial soundness. Preventing such dishonesty needs more than regulation.

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This month, Seventeen magazine promised it will never change the images of a model’s body or face shapes. The decision was the result of an online campaign led by a 14-year-old girl in Maine fed up with friends’ complaints about not meeting the body images portrayed – often falsely – in such magazines. (Teen Vogue is now the target of a similar campaign.)

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What can help people avoid being deceptive and dishonest? According to social psychologist Dan Ariely at Duke University, the best answer is not so much fear of regulatory punishment or even fear of God. Rather, in his new book, “The (Honest) Truth About Dishonesty – How We Lie to Everyone – Especially Ourselves,” he says the answer may lie in assuming that most people prefer to be honest – and just need the right kind of reminder.

“Doing something as simple as recalling moral standards at the time of temptation can work wonders to decrease dishonest behavior or potentially prevent it altogether,” he writes.

His social experiments show that cheating can be reduced to zero when people – even atheists – are asked to think about the Ten Commandments. One group of students didn’t cheat at all after they signed an agreement to follow the college’s “honor code” – even though the college didn’t have one.

Dr. Ariely says people have an innate “moral structure” and merely need to take note of their thinking with high scrutiny in order to behave better.

Still, he worries about the ease of deception.

“From all the research I have done over the years,” writes Ariely, “the idea that worries me the most is that the more cashless our society becomes, the more our moral compass slips. What will happen to our morality as a society as financial products become more obscure and less recognizably related to money (think, for example, about stock options, derivatives and credit default swaps)?”

He wrote that before news of the Libor scandal broke. His advice may be the best one to heed as officials in Britain and America sort out this grand deception on interest rates.

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