Predictably Noncompliant: What Behavioral Science Tells Us About Ethical Failure

The opening session of Ethicsverse Day 2026, titled Predictably Irrational: What Behavioral Science Can Teach Us About Wrongdoing Inside the Organization, brought host Nick Gallo of Ethico together with three of the most influential voices working at the intersection of psychology and compliance: behavioral economist and Duke professor Dan Ariely, author of Predictably Irrational and Misbelief; Christian Hunt, founder of Human Risk and author of Humanizing Rules; and Nadège Rochel who has spent years applying these ideas across global, highly regulated organizations. Together they dismantled one of the most persistent myths in the profession: that misconduct is mostly the work of a few bad actors making cold cost-benefit calculations.

The unifying argument of the session is that most compliance programs are quietly designed for the wrong person. They assume a rational, amoral actor who weighs penalties against rewards, when in reality the vast majority of wrongdoing comes from ordinary, well-intentioned people who rationalize a series of small steps until they end up somewhere they never intended to go. If that premise is true, the panel argued, then bigger penalties, more rules, and more training modules are often the least effective tools available — and a behavioral lens points toward a very different and far more humane playbook.

Key Takeaways

Most Programs Are Built for a Person Who Barely Exists

Dan Ariely opened with a provocation: most compliance programs are effectively designed for sociopaths — people with no morals who make a purely calculated decision about what they can get away with. Those people exist, but they are a tiny minority.
The overwhelming majority of misconduct comes from the roughly 98 percent of people in the middle who think of themselves as good and honest, and who are not even running the cost-benefit calculation that harsh penalties are meant to influence.
Because these people do not believe they are doing anything wrong, deterrence aimed at rational calculation misses them entirely. The real enemy, Ariely said, is not cost-benefit analysis — it is our incredible human capacity to rationalize bad behavior.

Humans Are Rationalization Machines

Ariely illustrated the point with his research: a rigged vending machine that returned both the candy and the money prompted most people to take only three or four items, never emptying it, because they could cheat a little and still feel good about themselves.
Other examples reinforced the pattern — people shave a couple of years off their age on dating profiles, and in cheating experiments almost everyone cheats a little while almost no one cheats a lot. People preserve a self-image of honesty by staying just under the line where they would have to see themselves as a cheater.
In a striking twist, when people cheated on behalf of a charity rather than themselves, they cheated far more — and a lie detector that worked when people lied for personal gain stopped working entirely, because the subjects did not feel they were doing anything wrong. Like Robin Hood, people who believe they are acting for a good reason feel liberated rather than guilty.

Misconduct Is a Slippery Slope, Not a Single Leap

The panel stressed that serious wrongdoing almost never starts with the final, obvious act. People take a small step, rationalize it, take another, and rationalize again — and organizations typically only examine the last, catastrophic step rather than the pathway that led there.
Ariely urged compliance teams to study the anatomy of how misconduct develops. In one large-company project, leaders were asked to narrate the full history of their unethical decisions — not to accuse anyone, but to understand the psychological pressures and moments of silence that allowed good people to drift into bad conduct.
The gas-company example crystallized the danger of ignoring the path: employees told to rush to a gas leak and allowed to park illegally also stopped wearing protective gear, because the organization had signaled that only speed mattered and the rules did not.

Environment and Saliency Change Behavior in the Moment

Rather than relying on penalties, Ariely argued for engineering the environment so that honesty becomes salient at the exact moment of decision. Telling people that an accurate number genuinely matters — and asking them to sign to confirm it — measurably increases honesty.
Every company runs countless systems for expense reports, travel, approvals, and reporting. Identifying the handful of moments that truly matter and making them feel like a professional, meaningful decision is far more powerful than a distant threat of punishment.

Culture Sends Conflicting Signals — and People Notice

A consulting firm discovered its people were cheating on an ethics module; the root cause was cultural. The firm gave overworked consultants no time to complete it and implicitly communicated that it was a check-the-box exercise and a second priority.
Christian Hunt warned against the language of perfection. Announcing that a company is intensely ethical, promising zero tolerance and then quietly excusing a senior leader, teaches employees that the organization is either naive or dishonest — and makes them more likely to follow the unethical path they actually observe.
Ethics, Ariely reminded the audience with a story from the Book of Genesis, is a genuinely complex trade-off. Rules pretend the world is clean and codifiable; real life forces people to weigh competing values like profitability against safety, and honesty against kindness.

The Additive Trap: More Rules, Less Compliance

The instinctive organizational response to a bad event is to add more rules to prevent that exact thing from happening again. The panel argued this often punishes the good people, kills motivation, and turns compliance into what Nick Gallo called a bureaucratic barnacle on the ship.
Hunt noted that regulators frequently reward additive solutions and that few organizations are willing to remove a control for fear of being blamed later. He challenged the reflexive worship of best practice and urged teams to question whether they actually know what regulators want.
Ariely called for the basic discipline of cost-benefit analysis in compliance and a genuine risk appetite: be all over the rules that can get people killed or cause serious harm, and be honest that 100 percent compliance is impossible. Bureaucracy that is never explained tells employees the organization does not trust or respect them.

Make Compliance Invisible and Explain the Why

The in-house panelist described embedding compliance into existing business processes so it reduces friction rather than adding administrative steps people do not understand — making the function as close to invisible as possible.
Her most vivid example: faced with a European privacy regulation that required extensive consent signatures no one wanted to complete, her team produced short videos explaining the why — delivered not by compliance but by the stakeholders and field colleagues themselves. The result was a 70 percent increase in consent completion.

Psychological Safety, Speak-Up, and Positive Framing

The panel framed psychological safety as the foundation of any program, and stressed reframing speaking up as a positive act of doing the right thing rather than a threat of consequences for staying silent.
One panelist rebuilt a silent speak-up culture by clarifying the process, removing the fear that a manager would be punished, and then publicizing how an employee's report had directly improved a broken process — which encouraged still more people to come forward.
Ariely praised Google's use of the word "Googly" as a cultural tool: asking whether a decision was "Googly" let people challenge an idea rather than accuse a person, lowering the threshold for raising ethical concerns in a meeting.

Design for Real Humans, Not a Fantasy Workforce

Hunt argued that programs are too often built for a fantasy world where employees are passionate about compliance and simply follow the process. The average employee is not passionate about compliance — if they were, they would work in it — so programs must reflect the messy realities of human behavior.
The panel highlighted contagion: people emulate the behavior of those they identify with, which is why the conduct of middle managers and leaders matters far more than posters or email signatures.
A recurring theme was practicing ethical behavior when the stakes are low — building the muscle memory to recognize and navigate difficult situations before the pressure moment arrives.

Practical Moves for Monday Morning

Co-create policies and training with the people who will actually follow them. Ask what confuses them, what would make their jobs easier, and how someone might get around a proposed rule — surfacing blind spots and building ownership at no cost.
Recognize that in compliance communication the messenger often matters more than the message; enlisting respected peers to carry the message works far better than another mandatory e-learning module.
Borrow from behavioral science's "psycho-logic" rather than pure logic: map the real drivers, social pressures, and incentives already shaping behavior, and expand the toolkit beyond rules and penalties.

Closing Summary

The through-line of this session is that wrongdoing is a predictable feature of human psychology, not the exclusive domain of villains — and that compliance becomes dramatically more effective when it is designed for the rationalizing, well-intentioned majority rather than an imaginary rational criminal. Dan Ariely, Christian Hunt, and their fellow panelist returned again and again to a few durable ideas: watch the slippery slope rather than only the final act, make honesty salient in the moment, align culture so it stops sending conflicting signals, resist the reflex to pile on rules, and explain the why behind everything you ask people to do. Above all, they urged the profession to treat employees as real, complex humans — giving them tools, practice, and psychological safety instead of platitudes and zero-tolerance slogans. For compliance leaders, the invitation is both liberating and demanding: stop engineering programs for a person who barely exists, and start designing for the people who actually walk through the door every morning.