11.* The Empire Globe Corporation. Susan Bond is Corporate Economist at
Empire Globe Corporation, a chemicals company. CEO John Treadstone created
the position so that he could have someone to help him with economic analysis of
market trends and company proposals. Bond was attracted to the company by
Treadstone’s professed philosophy of creating a partnership with stakeholders.
He created a “Partnership Conduct Team,” consisting of four experienced
managers, to develop ethical guidelines that exceed legal requirements and
monitor compliance with them. Ten years ago, Treadstone located a processing
plant in economically depressed Feldport, Oklahoma, against the advice of his
staff, because he believed the company could create an effective partnership with
the local players. In fact, they were so eager to attract jobs that the bank offered
financing at discounted rates, the town council granted a five-year exemption
from real estate taxes, the union (reluctantly) negotiated a no-strike clause, and
the power company agreed to a low rate.
The Feldport plant has recently become an issue, however. As the special
concessions expired, profit margins at the plant began to shrink. Treadstone set
out to obtain similar concessions for the next few years. He indicated that if the
company could not obtain adequate return on its capital investment, it would be
It is the day before the session. Bond is already concerned that the company is
demanding excessive concessions from the community, but her discomfort grows
The next morning, Bond cancels the meeting and contacts Ted Bates in the
finance department to ask for data that might justify demanding a lower rate. Ted
lets slip in the conversation that Empire has just landed a lucrative contract with
the Defense Department that calls for a 25% increase in production at Feldport.
Bond asks what happens if she is unable to get the 3.80 cents per kwh rate.
Treadstone responds, “Susan, negotiating means getting agreements. Anything
else on your mind?”
Hints. The negotiation principles discussed in Case 6.3 may be useful. A
utilitarian analysis can also be central to this case.
The analysis of Case 6.3 concluded that negotiators have no obligation to reveal
what terms are necessary for an acceptable deal. In fact, there is an obligation not
to reveal too much, because otherwise negotiation breaks down. Therefore,
On the other hand, stating that Empire will leave the community if it can’t get a
certain rate is a lie. This isn’t misrepresentation in the sense that it incorrectly
states what the community will receive in a deal, but it is a lie nonetheless and
Another factor is the utilitarian outcome. If the company drives a hard bargain
(honestly or dishonestly) that results in a predictably less than optimal overall
outcome, then it violates the utilitarian test. Some will respond that it is the role
and duty of business to get the best deal it can, come what may. This is the way
Susan has the difficult task of negotiating honestly while convincing Treadstone
that her performance is acceptable. Nobody said that ethical conduct is always
easy. True, if it is simply impossible for Susan to stay on as negotiator if she
plays it clean, then the utilitarian argument evaporates. Someone else will step in
12. Opt in or opt out. Countries typically use an opt-in or opt-out approach to
organ donation. Opt-in countries give people an opportunity to sign a donor card
to grant permission to us their organs. Opt-out countries assume that people give
permission unless they fill out a form or make a phone call to revoke consent.
Johnson and Goldstein report that organ donor consent is much higher in opt-out
countries. If permission to donate is the default, people tend to let it stand. They
are much more reluctant to give permission by overriding a default. Table 6.3
shows the rates for European countries. (The Netherlands’ relatively high opt-in
rate is due to an aggressive public campaign.) In the United States, an opt-in
country, 85% of people “approve” of organ donation but only 28% grant
permission. The article states that more than 45,000 people in the United States
died in 1995 while awaiting a donor organ. It suggests that many lives could be
saved by switching to an opt-out policy.
Because opting out requires some effort in Europe, one may ask whether the
inconvenience of opting out explains the low rates. Johnson and Goldstein
conducted an online survey of 161 U.S. respondents, who were asked to assume
that they had just moved to a new state. Question 1 asked them if they would opt
in to organ donation if given the opportunity. Question 2 asked if they would opt
out. Question 3 asked how they would respond if required to choose whether to
donate (with no default). The results (Table 6.4) show that only half as many
people donate when required to opt in. Defaults therefore remain a key factor
even when no effort is involved.
Is it ethical to use an opt-out system to save lives? Or is it dishonest? A rational
agent would presumably make the same choice regardless of the default. The low
opt-out rate suggests that an opt-out system plays on psychological factors that
distort the agent’s true intent. There are substantial opt-in/opt-out differences for
online privacy, selection of insurance coverage, and the level of pension savings.
Hints. There are several possible explanations for why people opt out, such as:
1. It is too much trouble to opt out.
Analyze the issue under each scenario.
Let’s begin with a utilitarian analysis, which is independent of the reason people
opt out. If we assume that life is an overriding value, an opt-out organ donation
policy clearly passes the utilitarian test, because it saves lives. In fact, an opt-out
However, utilitarian arguments can never override the other conditions of rational
choice. An action that fails the generalization test, for example, is unethical even
if it saves thousands of lives.
To apply the other tests, we will examine each of the possible motivations for
opting out that are mentioned in the exercise.
1. It is too much trouble to opt out. There is no apparent reason that opting out of
organ donation must be inconvenient. People could simply check a box when
renewing their driving license. However, the data suggest that by making it
Again, to clarify the matter, we are assuming for the moment that inconvenience
is the only deterrent to opting out. The option is conspicuous, and everyone is
aware of it. Given this, it is hard to see how an opt-out policy fails the
Inconvenient opting out imposes a tax on individuals who do not contribute to the
2. People don’t want to think about it. We now assume that opting out may or
may not be inconvenient, but inconvenience is not the reason people fail to do it.
They fail to opt out because they don’t want to think about the issue.
The online survey mentioned earlier suggests that when opting out is convenient,
people do so at about the same rate they deny permission when there is no default.
“Not wanting to think about it” can be interpreted two ways. One is that people
consciously determine that making a deliberate choice incurs too much emotional
Under these circumstances, an opt-out system treats a non-decision as though it
were a decision. It takes organs from people on the pretext that they have given
One may say that people who don’t opt out “deserve” to be treated as though they
Rawls’ idea of deciding behind a veil-of-ignorance principle may be helpful. It
states, roughly, that a policy must be one to which I can consent, before knowing
The basic problem is that the opt-out policy subverts rational decision making by
relying on an emotional response. It therefore violates autonomy. This does not
A similar argument may apply to some other opt-out policies, such as those
3. People overlook the matter. People may fail to opt out of organ donation
because the opportunity to do so is inconspicuous, or the option is presented at a
time when they are preoccupied with other matters. An inconspicuous option
maximizes utility because it saves lives, but we can ask whether it is
generalizable.
In this case, it is harder to argue that an opt-out policy, in and of itself, denies
agency. If I fail to read the fine print, or if I am distracted by other matters, this
could be the result of rational choices about how to allot my time and energy. If
Let’s suppose, then, that there is no denial of agency, which means that the
veil-of-ignorance argument used above falls apart. A generalization test is still
Contract law normally holds one responsible for reading all the fine print. A
utilitarian justification for this policy is that if people could escape a contract by
claiming they didn’t read it, the contractual system would bog down. However,
suppose a particular contract places a key provision in the fine print. For
One can apply this argument to special classes of contracts, such as driving
license applications, which we can for present purposes view as an agreement
The standard move at this point is to try to narrow the scope of the policy to make
We must first make sure that this modified rationale is a rationale. For this it must
meet three conditions. (a) It is truly the reason for the action; if lives were not at
stake, the people wrote the contract would not hide key provisions. We can grant
this. (b) The rationale must have some logical bearing on the choice to deceive (it
If we deceived to improve the quality of sushi, for example, we would be
The modified rationale therefore qualifies as a rationale, but it doesn’t generalize.
If people always hid important provisions in the fine print when lives are at stake,
people would examine the fine print when they know lives are at stake, and the
Suppose, however, that we hide key life-saving provisions in fine print only when
people don’t know that lives are at stake, as in the case of the license renewal.
The fact that they don’t know lives are at stake becomes part of the rationale.
This does not say that it is never ethical to save lives by deception. There are
cases in which it is ethical—not because saving lives overrides the generalization
Nor does it say that there is no ethical way to increase the supply of organs for
transplant. People may donate in equal numbers if given a choice with no default,
Virtue ethics is not directly relevant to a policy matter like the opt-out/opt-in
issue, but it is certainly relevant to individuals who have a role in implementing
the policy. A physician, for example, may decide that it is a violation of
To conclude, opt-out policies for organ donation can be ethical, even when their
inconvenience deters people from opting out—provided the policies satisfy
Thus a country that deliberately makes it hard to opt out does not, by virtue this
fact alone, impose an unethical policy. However, if people are also deterred from
13. Preserving a culture. Bob Littman is owner of a series of galleries and a
major client of Artifacts, an importer of ethnic arts. While having lunch with
Mary, a manager at Artifacts, he is introduced to Len. A buyer for Artifacts, Len
has traveled widely in South America in search of native artwork. One of his
major sources is the Amazonia people, whom he has gotten to know quite well,
even learning their language. Bob is very interested in Amazonia basketry and
indicates that he would like to place a series of large orders, provided the
Amazonia will make certain changes in the patterns and colors of their baskets to
suit the tastes of his customers. A deal of this magnitude would be highly
profitable both for Artifacts and the Amazonia. Mary is enthusiastic about the
idea. She proposes that Len return to South America and convince the Amazonia
to modify their designs, which should be a minor matter given their obvious skills.
Len, however, was an anthropology major in college and understands that the
Amazonia basket designs are not just pleasing patterns. Symbolism plays a
central and powerful role in many traditional cultures. The design elements that
displease Bob contain symbols that denote important events in the group’s long
history. Even if the Amazonia agree to change their designs, he fears that they
may not appreciate the risk of losing their symbolic tradition and the long-term
impact on their culture. To make matters worse, meeting the production quotas
would require that both men and women work on the baskets. Basket weaving is
an integral part of a woman’s role in Amazonia culture and never undertaken by
men. The honor of preserving and celebrating the history of their people inspires
women to spend a lifetime mastering the intricate designs. If Len explains all this
to Mary, should she ask him to take this assignment? If she does, how should Len
deal with the request?
Hint. A principle stated at the beginning of the next chapter may be helpful in
analyzing this case.
Chapter 7 states a corollary of the generalization test that can be applied to
cross-cultural situations:
An action is unethical if its general adoption in the host culture would
undermine a practice it presupposes.
Mary’s proposal could violate this principle. Amazonia culture developed and
preserved its basket weaving tradition because of its symbolism and the central
role that women play as guardians of the tradition. If both the symbolism and the
Because the company’s immediate interests are not affected by long-term decline
of Amazonia culture, Mary may not find this argument compelling. Len must
decide what to do about it. If he participates in the scheme, he would himself be
in violation of the generalization and utilitarian principles. In addition, he is
likely to have developed a strong personal bond with some of Amazonia people,
The utilitarian principle asks Len to seek alternatives. Perhaps he can identify
other peoples to help meet demand with their own artifacts and take pressure off