1. Decision Criteria Used In Assessing Alternatives
2019/4/22
Topic 4
Decision Criteria Used In Assessing Alternatives
2019/4/22
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2. 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.
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3. 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
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4. 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
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5. Utilitarian Approach Maximizing total utility
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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
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6. 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
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7. Limitations of utilitarian approach Difficulty to measure
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Utilitarian Approach
Limitations of utilitarian approach
Difficulty to measure
Majority wins
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8. Rights Approach (Deontology)
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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
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9. 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
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10. 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
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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
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11. 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
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12. Egoist Approach Promoting self-interest
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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
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13. 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 …
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14. Preserving virtues that don’t change over time and cultural
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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 …
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15. Normative Ethical Theories
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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
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16. Conscience As The Bottom Line
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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
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