Friend and Foe: When to Cooperate, When to Compete, and How to Succeed at Both (16 page)

“Every lie is a sin.”

—St. Augustine, fifth century

For centuries, parents, spouses, and religious leaders have echoed this sentiment. But is it always? Think about what you should do when your grandmother asks if you enjoyed her meatloaf, your friend asks if you enjoyed her wedding reception, your child asks if you liked his choral performance, or your spouse asks you if their new jeans make them look fat? In situations like these, deception might be exactly the
right thing to do
. It helps us keep our friends and prevents acquaintances from becoming our foes. In other words, sometimes we use deception to build cooperation.

In a project led by Emma Levine at Wharton, we studied the benefits of
prosocial
deception; by prosocial we mean lies that
benefited
other people. In some of our studies, we asked people to judge the morality of different types of lies. Some of these were prosocial lies. In other studies, we had people make decisions after receiving advice from a partner. After making their decisions, they learned two pieces of information: a) whether or not their partner had misled them and b) how much money they had earned. And here's the interesting part. Some of the time, our participants earned
more
money because their partner had lied to them. That is, some lies were prosocial.

We ran several different variations of this study, and we kept finding the same pattern of results. When people told prosocial lies they were judged to be
more
moral than those who told the truth. And people trusted these prosocial liars more, too.

As we think about using deception, we should keep two things in mind: expectations and intentions. In many competitive situations, we
expect
our foes to deceive us. For example, in poker or in a negotiation, we'd be shocked if our counterparts
didn't
bluff.

In contrast, in many cooperative situations we expect graciousness. So when our neighbors invite us to dinner and ask how we liked the food, they may not be seeking an honest review. As Alison Fragale of the University of North Carolina found, sometimes deception is even seen as a sign of respect; when a colleague misses our party, they might (respectfully) cite an illness rather than their preference to catch up on a TV series.

Sometimes deception is even good for our health. Consider a doctor who overstates the likelihood that an experimental drug will work. This may be deceptive, but often it is done with benevolent intentions. Lisa Iezzoni of Harvard Medical School found that over 55 percent of doctors tell their patients that their prognosis is better than it really is. By misleading patients, many doctors hope to activate the self-healing potential of the placebo effect and the power of optimism.

In other words, people care about honesty (and they should), but sometimes it pays to care more about other things, like kindness and concern.

Though we are taught that lying is unethical and harmful, the truth is that many lies actually bind us together and promote trust. So is it ethical to tell prosocial lies? Our answer is yes.

And we'd even take this claim a step further. Rather than admonishing our children to never lie, we should teach them the guiding principle of benevolence, and that they should make careful—and deliberate—choices when they face a conflict between telling the truth and being kind.

Of course, sometimes telling the truth and potentially hurting someone else's feelings is actually prosocial because it helps the person in the long run. When we lie and tell someone they performed better than they really did, we deny them the opportunity to learn from their mistakes. Without honest feedback, we can get stuck in mediocrity. After a middling performance, there is a trade-off between helping someone feel good and helping them learn from their mistakes. As a result, we need to consider two key questions when we decide whether to be brutally honest or tell a prosocial lie. First, how important is it to boost a person's self-esteem? Will candid feedback sting so badly that it demoralizes them? Second, how useful is the feedback for their long-term success? For tasks that really matter for future success, honesty may be the best route to take. But when a task really doesn't make much difference—like your grandmother's meatloaf—prosocial lies can be just the right thing to say. Many of us, including teachers, parents, coaches, or managers, navigate this balance all the time.

So sometimes deception builds cooperation. Other times, deception can exploit and undermine us. What should we look for to guard against being fooled and exploited?

Bernie Madoff perpetuated the largest Ponzi scheme in the history of the United States, producing billions of dollars in fraudulent funds. Somehow, the SEC missed Bernie Madoff's red flags. But they were there. Securities industry executive Harry Markopolos saw them. To Harry, the flags were abundant and crystal clear. He even pointed them out to the SEC, but nobody listened to him. They should have.

Here is what Harry saw. First, Madoff's returns were too high and too positive. Anyone who's invested in the stock market knows that stocks go up…and down. But Bernie reported returns that nearly always went up: He reported negative returns in only 4 percent of the months!

Second, Madoff's activities were unusually secretive. For example, he refused any outside audits; no one was allowed to do any due diligence. And he wouldn't let third-party hedge funds that invested with him advertise their connection. Because he wouldn't allow due diligence, he was shut out of short-term credit markets and had to borrow money at a very high rate, another red flag.

Third, Madoff claimed to be “timing” the market, hopping in and out of stocks. Nobody invests that way. He also claimed that he hedged his stock purchases with OEX index options. But Harry knew that this couldn't be true because the number of OEX options Bernie would need simply didn't exist.

None of this made sense. The red flags were waving everywhere but the SEC missed them. It's possible that the layers of bureaucracy within the SEC made it hard for the organization to spot these signs. Are individuals better than organizations at spotting clues? How might an ordained minister and psychotherapist do if a parade of red flags were waved right in front of them? As we will learn, not too well.

Consider John Worley. His first mistake was opening the e-mail addressed to the generic “CEO/Owner.” His second mistake was replying to it, even after reading the words “I decided to seek your assistance in transferring some money out of South Africa into your country, for onward dispatch and investment.” The e-mail was signed by Captain Joshua Mbote, who explained that he had $57 million in cash and needed a partner with a foreign bank account.

Would
you
trust Captain Mbote? Our quick reaction is “No way!” Yet scams just like this one reel in millions of dollars from people just like us, and just like John Worley.

The e-mails John received waved almost every red flag you could imagine. The e-mails lacked personalization. John was asked to provide bank account information, wire money, and fly to Africa at the request of complete strangers. In return, he was promised a fantastic sum of money—$16 million.

In thinking about John Worley, we want to understand
why
John was so trusting in the face of clues that should have sounded the alarm and caused him to run, not just walk, for the nearest exit.

Curiously, John did exhibit skepticism at various points of this scam. But his concerns were easily allayed by the scammers. For example, when John asked Mbote how he had found him, Mbote explained that the South African Department of Home Affairs had supplied his name. Most of us would be thinking,
the South African Department of what??
But this answer satisfied John.

Worse, when John received a check from a “fellow investor” for $47,500, and found it odd that it was drawn from an account belonging to something he'd never heard of, called the Syms Corporation, John was skeptical enough to call the bank before he deposited it. It was a good idea, because the check was a fraud. So he confronted “Mbote” and told him he was through.

Soon after this declaration that he was finished, however, he began to receive e-mails signed by a different person: “Mohammed Abacha,” the alleged son of a former Nigerian dictator who had money hidden in Ghana. Mohammed Abacha explained that Joshua Mbote had been operating on his behalf, but had bungled things badly. He apologized for how things had been handled, and he assured John that now he, Mohammed, was taking over and that the situation could be righted. And Mohammed put John in touch with Maryam Abacha, the purported widow of a general who needed help transferring a similarly fantastic sum of money.

It was in this e-mail exchange that John noticed Maryam's name was spelled differently across e-mails. In one it was Maryam, in another Maram, and still another Mariam. John wrote, “I would think that everyone would know how to spell their own real name. Obviously, someone does not.”

But even this was not enough to scare him off. The scam artists managed to calm his fears and win over his trust. They even subjected
him
to a credit check. With misplaced confidence, John dove deeper into the scam; he set up an offshore account and he went on to deposit two checks, one for $95,000 from the Robert Plant Corporation and one for $400,000 from a Michigan marketing company. At first, the checks cleared. The money appeared in John's account, and he promptly wired the money to a Swiss account following Maryam's directions.

The checks, however, had been fraudulent, and John's world came crashing down.

John was arrested and brought to trial for bank fraud, money laundering, and possession of counterfeit checks. He was found guilty on all counts, and sentenced to two years in prison and ordered to pay restitution for $600,000.

Why was John so willing to believe their flimsy explanations, especially after they had mixed up their stories, misspelled their own name, and sent him a fraudulent check?

We may think that we are masters at spotting the clues of deception. In actuality, however, we are terrible lie detectors.

Deception is often successful for two reasons. First, we are inherently trusting creatures. Unless we have evidence to the contrary, we typically accept that people are telling the truth and trust what they tell us. This is particularly true of people we know—our family members, our friends, and our coworkers. We call this the “truth bias.” The truth bias tilts the odds in the liars' favor.

When we want to believe, our minds help us overlook even the most glaring of reasons not to. This was true for John Worley, and it is just as true for anyone who's ever been deceived by a con artist; think about the thousands of investors who gave their life savings to Bernie Madoff.

There is a second reason why lies often succeed. We are
overconfident
in our ability to detect lies. This is especially true for romantic partners. We think that we know our partners so well that we would automatically detect the first sign of deception. When a husband claims, “I'd know in an instant if she ever lied to me!” he is mistaken more than he might care to imagine.

Before we place our trust in others, we need to first consider what we want to believe. Then, we need to think carefully about what we do
not
want to believe. Though it can be uncomfortable, the best way to avoid being exploited is to actively look for those very clues we hope
not
to find. Because, if we are being deceived, we're better off knowing about it sooner rather than later, before we get taken for a ride.

It is hard to detect deception. But the clues, the red flags, are often right there in front of us. Yet, we often miss them entirely. Fortunately, science has taught us a lot about the clues that liars leave behind.

Before we can detect the signs that someone is being deceptive, the very first thing we need to do is establish a baseline. In finance, if we know how frequently the market goes up and down, we can recognize that positive returns 96 percent of the time are “unusual.” Similarly, for our friends and foes, it is only after we know how they behave normally that we can spot changes that indicate that they might be lying. After all, what constitutes “normal” behavior differs across individuals. Some people avoid eye contact routinely. Some people always use the phrase “To be honest.” Others act inappropriately in situations on a regular basis. So while each of these behaviors can indeed be a sign of deception (as we'll explain), they aren't very diagnostic if they are “normal” behaviors for that person.

Establishing a baseline is exactly how a polygraph test starts. As many of you know, the polygraph only measures arousal. Because some people show more arousal on average than others, it would be terribly unreliable without a baseline reading to account for a person's normal level of arousal. So a polygraph administrator needs to compare your arousal levels when you answer simple questions (e.g., what is your name?) with your arousal level in the face of tough questions.

In fact, if you know what to look for, baseline measures can even help you spot the bluff of a professional poker player. As Michael Slepian of Columbia University found, even professional poker players raise red flags. While poker players are experts at masking their facial expression, they still leak physical cues that reveal whether or not they have a good hand. How? By the way they extend their arms to move their chips! A steady move in is a sign of real confidence. But when players bluff their arms zigzag and don't follow a direct path. This shows us that even the best liars among us leak cues. Establishing that baseline helps you figure out what to look for.

Once you have a baseline, you then need to pay attention to what people are saying.

How do you begin? By asking the right questions. In work led by Julia Minson of Harvard, we studied what types of questions work best for detecting deception.

Let's say you are looking at a used car. You could ask general questions that elicit broad and open-ended answers, such as “What can you tell me about the car?” General questions are good for starting a conversation, but they are not very good at uncovering the truth. In answering a general question, it is simply too easy to omit key information.

You might ask questions that have positive assumptions, such as “The car doesn't have any transmission problems, does it?” These are better at detecting deception because they force the person to address a key issue by coming clean or affirming false information.

But the best questions to ask are open-ended ones that involve
negative
assumptions: “What problems does the car have?” This phrasing forces the responder either to reveal information or actively come up with a deceptive answer.

Another way to make deception easier to detect is to increase what we call cognitive load. When someone is lying, they have to think harder. As Mark Twain put it, “If you tell the truth, you don't have to remember anything.” In other words, when we lie, we need to fabricate a story
and
keep track of the truth. The need to process and remember more information when we lie places us under greater cognitive load.

So how does this help us detect deception? It turns out that when we think harder, it changes how we communicate. We are more likely to use pause fillers (um's and ah's) as we collect our thoughts, and it takes us longer to answer questions. We gesticulate less, and when we do move our hands or nod our head it might look mechanical or delayed. Under cognitive load we also make mistakes. We might emphasize the wrong words, such as saying “yes,” but shaking our head “no.” We might even catch and correct ourselves midway through as in “yeah—I mean no.” Detectives and investigators routinely exploit cognitive load to catch liars. They know that if they can add to the mental strain a liar is under, a mistake becomes almost inevitable.

How do you increase cognitive load? Some investigators ask questions out of chronological order or ask for seemingly irrelevant details about the story, e.g., “What was the weather like then?” Or they might play talk radio or have the TV on in the background to serve as a distraction. Then, they sit back and watch for mistakes.

Once you have established a baseline and have started to ask pressing questions under cognitive load, you're ready to start looking more closely at how they are
acting
. Here we identify four red flags and describe how to spot them.