Decision Criteria Used In Assessing Alternatives 2019/4/22 Topic 4 Decision Criteria Used In Assessing Alternatives 2019/4/22 Week 1

2019/4/22 Sam’s Dilemma Sam Wong, a sales representative, is preparing a sales presentation for his firm, Hang Seng Hardware, which manufactures nuts and bolts. Sam hopes to obtain a large sale from a construction firm that is building a new tunnel linking two big islands in the N.T. The bolts manufactured by his firm have a 3% defect rate, which, although acceptable in the industry, makes them unsuitable for use in certain types of projects, such as those that may be subject to sudden, severe stress like an earthquake. If Sam wins the sale, he will earn a commission of $200,000 on top of his regular salary. But if he tells the contractor about the defect rate, Hang Seng may lose the sale to a competitor whose bolts are more reliable. Week 1

2019/4/22 Sam’s Dilemma Thus Sam’s ethical issue is whether to point out to the tunnel contractor that, in the event of an earthquake in Hong Kong, Hang Seng bolts could fail, possibly resulting in the collapse of the tunnel and the death of anyone driving across it at the time. Sam’s major alternatives may include: 1.Do not inform the tunnel contractor of the defect rate 2. Inform the tunnel contractor about the defect rate Week 1

Need for Decision Criteria Set of principles or rules to decide what is right or wrong The need for a set of guidelines To analyzing ethical issue To choosing an ethical alternative To justify a decision or explain an action Three common approaches Utilitarian, rights and justice Other criteria egoist, virtue and conscience 2019/4/22

Utilitarian Approach Maximizing total utility 2019/4/22 Utilitarian Approach Maximizing total utility Seek the greatest good for the greatest number of people Cost-and-benefit analysis Calculate the utility of the consequences of all possible alternatives Ethical when benefits exceed costs 2019/4/22 Week 1

Utilitarian Approach (Sam’s Dilemma) 2019/4/22 Benefits Improve roadways, less traveling to reach jobs Create hundreds of jobs, enhance the local economy Increase the firm’s revenue, maintain and create jobs, allowing the firm to invest more in research to lower the defect rate Personal gain Costs Could kill or injure as many as one hundred people if the tunnel collapse. But the bolts have only a 3% defect rate, and there is a very rare chance of an earthquake in HK => very low risk Decision Building the tunnel with the company’s bolts would create more utility (jobs, economic growth, company growth, personal gain) Do not inform the contractor about the defect rate Week 1

Limitations of utilitarian approach Difficulty to measure 2019/4/22 Utilitarian Approach Limitations of utilitarian approach Difficulty to measure Majority wins 2019/4/22 Week 1

Rights Approach (Deontology) 2019/4/22 Rights Approach (Deontology) Rights Approach (Sam’s Dilemma) Although constructing the tunnel would benefit residents, generating growth for the firm and financial gain personally, but the failure of the bolts in an event of earthquake would infringe on the rights of any person crossing the tunnel at the time of the collapse. Inform the contractor of the defect rate Respecting stakeholders’ rights Fundamental theory: equal respect must be given to all persons Classifying rights into a few groups e.g. moral rights, legal rights, contractual rights, basic human rights … Limitations of rights approach Difficulty to balance conflicting rights 2019/4/22 Week 1

Ethical when benefits equal costs Justice Approach Maintaining the fairness of treatment or equitable distribution of costs and benefits Ethical when benefits equal costs Limitations of justice approach Difficulty to measure Lack of agreement 2019/4/22

Ethical when benefits equal costs Justice Approach (Sam’s Dilemma) If inform the defect rate, firm’s competitor will win the sale: Benefits: In an event of earthquake, the tunnel would not collapse Improve roadways, less traveling to reach jobs Create hundreds of jobs, enhance the local economy Costs: Hang Seng will lose the sale, less revenue, unchanged quality of products, possibility of staff lay-off Lose the chance to earn $200,00 commission, may loss job Decision: inform the contractor of the defect rate 2019/4/22 Justice Approach Maintaining the fairness of treatment or equitable distribution of costs and benefits Ethical when benefits equal costs Limitations of justice approach Difficulty to measure Lack of agreement 2019/4/22 Week 1

Egoist Approach Promoting self-interest Self-interest may be construed: Power, pleasure, fame, wealth, physical well-being, a satisfying career, a good family or something else Unethical egoists versus enlightened egoist 2019/4/22

Egoist Approach Promoting self-interest 2019/4/22 Egoist Approach (Sam’s Dilemma) If his self-interest defines as personal wealth, he may value $200,000 commission more than a chance to reduce the risk of a tunnel collapse Decision: keeping quiet about the defect rate Promoting self-interest Self-interest may be construed: Power, pleasure, fame, wealth, physical well-being, a satisfying career, a good family or something else Unethical egoists versus enlightened egoist 2019/4/22 Week 1

Preserving virtues that don’t change over time and cultural Virtue Approach Preserving virtues that don’t change over time and cultural Elements of virtue e.g. faith, conviction, honesty, truthfulness, integrity, fairness, just and equitable … 2019/4/22

Preserving virtues that don’t change over time and cultural 2019/4/22 Virtue Approach Virtue Approach (Sam’s Dilemma) Consider the elements of virtue and tell the contractor about the defect rate and his concerns regarding the tunnel and the risk of injury. Might even suggest alternative products or companies that would lower the probability of the tunnel collapsing Preserving virtues that don’t change over time and cultural Elements of virtue e.g. faith, conviction, honesty, truthfulness, integrity, fairness, just and equitable … 2019/4/22 Week 1

Normative Ethical Theories 2019/4/22 Consequentialist theories Utilitarian approach, Egoist approach Non-consequentialist theories Rights approach, Justice approach, Virtue approach Different criteria >> different focuses Can not prescribe the use of any one approach over another Prioritizing concerns Using a combination of approaches 2019/4/22 Week 1

Conscience As The Bottom Line 2019/4/22 Conscience As The Bottom Line The use of different normative theories may yield inconsistent conclusions How about listening to our “inner voice” ? Limitations No universal standards; unstable and not reliable What should the decision-maker do ? Referring to standards of behaviour Society’s moral principles and values, laws and regulations, statements of professional ethics, company’s corporate culture and code of conduct…. Resisting rationalizations 2019/4/22 Week 1