Chapter 4
1. Suppose that when John Pepper discovered the espionage, he also discovered that very
similar information appeared in the business media the day before the trash bins were raided.
How does the analysis change?
P&G might argue that searching the trash bins was not espionage because it collected only
publicly available information. Yet for purposes of the generalization test, it is the rationale that
P&G might also insist that its data collection activity didn’t harm Unilever, because the media
2. In the previous exercise, suppose that shortly after the Unilever story appeared, other media
outlets reported that the journalist paid a Unilever insider for the information, and the insider
was fired.
The purpose of this exercise is to help students recognize irrelevant facts. The media reports
3.* Suppose that P&G acquires secret Unilever marketing plans from an attached file that a
Unilever employee mistakenly sends to a P&G employee.
In this scenario, P&G doesn’t deliberately set out to gather information, but receives it by
accident. Suppose that companies always made use of secret information they accidentally
Exploiting the information may fail to maximize utility, however, because it may result in more
harm to Unilever than benefit to P&G. Yet isn’t harming the competitor the whole point of
business? Harming the competitor may in fact be ethical even when it reduces utility, if failure
4. In the previous exercise, suppose that the attached file is deliberately sent to P&G from a
disgruntled Unilever employee who was fired for some other reason.
In this scenario, the information is released by an unethical act. It doesn’t follow, however, that
5. Is all spying wrong? For example, is spying on another country for national security
generalizable?
This is a fairly straightforward application of the generalization test. Let’s suppose that one
country spies on another, perhaps to determine whether it is developing nuclear weapons. The
6.* Spy or customer? Business Equipment Corporation (BEC) has developed a new technology
that will enable it to launch a fax machine superior to anything now on the market. Kyle,
product manager at BEC, goes into panic when he reads that Hiyota, a competitor, plans to
release a new high-quality fax machine before BEC’s product will be ready. Kyle must find out
what the machine can do as soon as possible, so he can give the production department new
specifications if necessary. He asks his marketing consultant Lynn to make an appointment with
a Hiyota sales representative and pretend to be a customer. During their discussion, she will
obtain copy samples and learn as much as possible about product features, pricing, and
marketing strategy. Lynn is hesitant about the ruse and doesn’t want to waste the sales rep’s
time. However, Kyle insists that it is perfectly legal because no trade secrets will be stolen.
People do this sort of thing all the time, and it is Hiyota’s responsibility to make sure information
doesn’t leak out before the product hits the market. Besides, sales reps are accustomed to
unproductive sales pitches, and who knows, the rep may convince Lynn to buy the new Hiyotas
for her company.
This is not a case of spying, because the information gathered is already available to the public,
at least through sales representatives. However, posing as a customer may be unethical on the
Taking the second argument first, it is hard to establish an implicit agreement of this sort. For
one thing, suppose that unknown to Lynn, all the information presented by the sales
The deception argument is more potent, because it seems clear that Lynn is acting under false
Lynn can respond, however, that her appearance without such an announcement doesn’t cause
the sales rep to believe that she is a legitimate customer. It only fails to cause the rep to believe
Kyle also remarks that Lynn’s firm may end up buying Hiyota equipment. So even if Lynn
causes the sales rep to believe falsely that her firm intends to buy fax machines, she doesn’t
cause the rep to believe something she knows is false. There is a legitimate point here that must
This sounds pretty neat, until the sales pitch actually starts. The sales rep may ask specific
questions about the needs of Lynn’s company. Some questions may be innocuous, such as the
Lynn’s interview with the sales rep may therefore be generalizable, but only if she is prepared to
come clean as soon as the conversation requires her to start making things up.
Virtue ethics may also be relevant. In the P&G case (Case 4.1), we concluded that digging
7. It is argued above that returning a damaged car violates the sales agreement because the car
is not in the same condition as when the agreement was made. Suppose Joe refutes this by
pointing out that even if there had been no accident, he would not have returned the car in
precisely the same condition. The few miles to the restaurant would put some wear and tear on
the automobile, but no one would say that the agreement was breached. Thus the fact that the
car is returned in an altered condition is insufficient to show that the agreement is breached.
What is the flaw in this refutation?
Juan expects Joe to put a small amount of wear and tear on the car before it is delivered. So
there is no reason to believe the sales agreement assumes that this won’t occur. On the other
8.* There is a small chance that Juan will get in serious trouble with his boss when it is later
discovered that the trade-in car is damaged. How might Joe argue that this does not affect the
outcome of the utilitarian test?
Joe can grant that Juan could get in trouble, but maintain that the probability of this occurring is
9. Suppose Joe grants that if sellers always delivered damaged goods when the damage is
inconspicuous, buyers would check carefully. But he, in particular, would still be able to deliver
the damaged car, because the dealer would have already checked the car carefully and would
not check again. Let’s suppose Joe is right about this. Why does his action still fail the
generalization test?
10. You engage a real estate “agent” (actually, broker) to help you find a house in an unfamiliar
city and give her the price range. She only shows you houses that are at the upper end of the
range, because her commission is a fixed percentage of the sales price. Does her conduct
conform to professional ethics?
The point of this exercise is not so much to arrive at a particular conclusion as to recognize the
Professional obligation is the duty to maintain standards of behavior that one’s profession has led
the public to expect. This is a question of fact that can only be settled by finding out what people
Yet the evidence for this interpretation is ambiguous. For example, the Code of Ethics of the
When representing a buyer, seller, landlord, tenant, or other client as an agent, realtors pledge
themselves to protect and promote the interests of their client.
Providing a representative selection of properties may be one way to serve the client’s interests,
There is also some question as to whether a real estate agent is seen as a professional in the same
sense as a doctor or lawyer. There are no degree requirements for a real estate agent in the U.S.
beyond a high school diploma, although agents are generally required to take some additional
There is consequently no compelling case that your agent’s behavior is in violation of
11.* Pricey insurance. Mark, an insurance salesman, is concerned about the product he sells
most. It is a “whole” life policy that provides death benefits, retirement savings, and a fund that
can be accessed in an emergency. The problem is that it is not a good deal for the young
families who buy it from him. They would do better to buy a “term” life insurance policy, which
provides only a death benefit, and use the savings to buy an annuity. On the other hand, term
insurance and annuities are much less profitable for the company, and the sales commission is
therefore much less. Mark’s commission on a whole life policy is 110% of the first year’s
premium. Mark can support his family only by selling a substantial number of these policies. Is
Mark living up to professional and other ethical obligations?
Let’s first look at Mark’s professional obligations. The point of the exercise is not so much to
arrive at a particular conclusion as to recall what professional obligation is and how to identify it.
Establishing professional obligation involves resolving an issue of fact as well as ethics: what
Insurance salespeople must obtain a license by taking some coursework and passing one or more
exams that cover insurance regulations. However, the primary purpose for the exam is to make
The U.S.-based National Association of Insurance and Financial Advisors (NAIFA) has adopted
I believe it to be my responsibility… to present accurately and honestly all facts essential to my
clients’ decisions.
Mark could present all the technical facts related to term and whole life policies without making
The ultimate criterion is whether the public regards insurance sales as a profession that has
promised to conduct itself in certain ways. I can find little evidence that people view insurance
It remains to address a more fundamental question posed by the exercise: is Mark’s line of work
Whole life policies make sense in some circumstances, but my reading of expert consensus is
that they are not worth the cost for most people. Insurance companies incentivize their sale with
At least on the face of it, the ethics of Mark’s situation is straightforward. He is causing some of
his clients to believe something he knows is false, namely that a whole life policy is the best deal
Mark might respond that compromise is unavoidable in any job. No one can be ethically pure,
including writers of ethics textbooks, and purity should therefore not be expected. If Mark is
Mark might go on to say that one cannot achieve anything significant in life without
compromises. Perhaps one can remain pure by secluding oneself in a monastery, but to
Actually, a certain amount of “compromise” may be ethical, or at least generalizable, if
Mark’s goal is to help clients obtain financial security. In an economy where the public safety
Let’s apply the generalization test. We assume that Mark’s reason for misleading clients is that it
is the only way he can help them obtain financial security. Suppose all insurance salespeople
We must check two more things, however. Does Mark’s rationale have the correct scope, and if
so, does it really apply to his situation? If it has the correct scope, he would reject dishonesty if
On the other point, however, it is very doubtful that Mark’s stated rationale even applies to his
12. It is often said that if there is risk associated with a medical product, there should be full
disclosure of that risk. Can you defend this claim using the conditions for rational choice, even
when disclosure is not required by law?
Failure to disclose hidden risks is deceptive and therefore ungeneralizable. Selling a product of
any kind implies that it is safe to use, apart from any obvious hazards. If I sell you a chain saw, I
13. A pharmaceutical company has developed a remarkably effective headache remedy and is
deliberating whether to market it over the counter or as a prescription drug. Over-the-counter
sales would be more profitable and would reach far more headache sufferers. However, the
medication doesn’t ease migraine headaches, the most severe type of headache. In fact, clinical
trials suggest that for 10% of migraine sufferers, use of the medication results in twice as many
headaches as before. The effect seems to be permanent, or at least to last as long as the trials.
An over-the-counter label could carry a warning to migraine sufferers, but many of them don’t
realize that their headaches are migraines. If the drug required a prescription, doctors would
dispense it only to patients without migraines. Would over-the-counter sales satisfy the
Difference Principle? Hint. There are two groups to compare when applying the Difference
Principle: those with severe cases and those with mild cases.
Regardless of whether the drug is prescribed or over-the-counter (OTC), the worst-off group will
be migraine sufferers. If the drug is prescribed, they will all have the same migraine headaches
14.* A new flu medication can act as a cure or as a vaccine, but a curative dose is 10 times
larger than a vaccination. The cure and the vaccine always work. Half of healthy persons who
don’t receive the vaccine will get the flu. The medication is in short supply. Health authorities
can use all of it as a cure or all as vaccine, or some combination of the two. What allocation
maximizes utility? What allocation(s) satisfies the Difference Principle? Hint. Utility is
measured by the number of persons who don’t get the flu. There are potentially four groups to
consider when applying the Difference Principle: treated sick patients, untreated sick patients,
vaccinated healthy patients, and unvaccinated healthy patients. The benefit to a group can be
measured by the probability that a person in that group will get the flu.
First, the utilitarian calculation. If the measure of utility is the number who don’t get the flu,
We get the same result if we assume that curing the flu increases utility. Ten doses of vaccine
Now let’s apply the Difference Principle. The four groups of people can be labeled A, B, C, D as
in the table below.
Treated Not treated
If some doses are used as vaccine and the rest as a cure, the probability of a person in each group
will get the flu is as follows:
Treated Not treated
Those with a probability of 1 are worst off. If all doses are used as vaccine, we have only groups
This time, the analysis is different if we acknowledge that curing the flu makes people better off.
The table becomes
Treated Not treated
because sick persons who are treated count as some fraction p of a flu case, where p < 1. Group
B is the worst off in every scenario except when everyone with the flu is treated, in which case