Instructor’s Manual
for
Business Ethics as Rational Choice
Published by Pearson Prentice-Hall
John Hooker
Carnegie Mellon University
August 2010
1
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
, Contents
Part I – How to Use the Book 1
The Book’s Approach 1
Classroom Use 2
Using the Expository Material 3
Using the Exercises 7
Using the Case Studies 9
A Note on Rational Choice Theory 11
A Note on Moral Epistemology 10
Part II – Exercise Solutions 13
Chapter 2 13
Chapter 3 28
Chapter 4 31
Chapter 5 59
Chapter 6 73
, Part I – How to Use the Book
The Book’s Approach
Business Ethics as Rational Choice is based on the premise that ethics can be
learned in basically the same way as engineering or mathematics. It presents the
theory and then asks students to work exercises until they learn how to apply it.
Ethical decision making, like any skill, is developed through structured practice.
The aim is to bridge the gap between theory and application. Approaching ethics
from a purely philosophical perspective that presents Kant and Aristotle may fail
to provide specific guidance in a messy real-world situation. Coming from a
practical perspective that discusses real-life case studies may offer no principled
method for analyzing them. The book attempts a rational reconstruction of
normative ethics that is robust and precise enough to obtain results in real
situations.
The book’s central theme is that ethical behavior is rational behavior, in a
sufficiently broad sense of rationality. The book resists the popular tendency to
equate rational behavior with rational self-interest. It argues that failing to
consider the interests of others is irrational, not because it may eventually hurt
one’s own interests, but because it is inherently illogical and self-contradictory.
This leads to specific conditions that a rational decision must meet. Students are
asked to evaluate whether a given decision is ethical by subjecting it to these tests.
No theory can be understood or appreciated until it is forced to deal with the
subtleties and surprises of real-world application. Think about Maxwell’s
equations in physics, or the conservation of energy principle. They are easily
stated, but science and engineering students spend years grinding through
countless exercises before they can apply them usefully and appreciate their
power. The proposed book likewise takes students through exercises that show
how to apply ethical theory and gradually reveal its full meaning and
implications. Students are cautioned that analysis of this kind rarely yields a final
or complete solution, but it can allow one to make some progress toward
resolving an issue, rather than going around in circles, as so often happens in
ethical disputes.
The analyses in the book attempt to set an example of intellectual discipline.
They avoid invoking arguments that may sound convincing but do not apply the
conditions of rational choice. Students are asked to follow this example. They
quickly learn that they cannot simply sit around and exchange views, as they
might have expected to do in ethics class, but must defend their views with
intellectual rigor.
, Students may not initially prefer this approach. It is nothing like the ethics course
they imagined. In time, however, they may come to realize that these concepts
fill a gap in their conceptual equipment and provide them a vocabulary for
discussing ethics. They may begin to give the material the kind of respect they
give chemistry or mathematics. They may enjoy the intellectual challenge of
solving ethical puzzles. They may find it satisfying to be able to work through
dilemmas and actually make some progress toward a defensible conclusion.
To earn credibility, however, it is essential that the case studies and exercises be
absolutely realistic. I pursued this goal throughout the book. The scenarios come
from several sources, including my MBA students and executive education
participants (I have a collection of some 200 dilemmas they submitted
anonymously, although many of them are similar). I don’t clean up the scenarios
to simplify the analysis or to make them more effective pedagogically. I take
them as they come.
Classroom Use
The book is not intended to be a comprehensive resource for business ethics
instruction. It contains no full-length case studies and no sections dedicated to
such specific problem areas as employee rights, sustainability, product safety,
marketing ethics, accounting ethics, or whistle-blowing. It is focused on building
skills that, in my view, are a prerequisite to everything else. Certainly ethics is
much more than logic-chopping. It also rests on experience, judgment, and
domain-specific knowledge, and case studies and problem-specific materials can
play a role in developing these. Yet in ethics, as in finance or operations,
judgment and experience are built on an analytic foundation. This text provides
the materials for the foundation.
I developed the materials over several years for the ethics program at the Tepper
School of Business at Carnegie Mellon University. They evolved from
interaction with students at undergraduate, MBA, and executive levels. Based on
this experience, I believe the book is suitable for the following classroom
situations:
(a) A short business ethics course or module that is dedicated to skill building
rather than the case study method. I use the materials in required and
elective ethics modules at the undergraduate and MBA levels. The
modules have varied in length from three to seven 80-minute sessions.
(b) A full course in business ethics that focuses, at least in part, on decision-
making skills. The book can be supplemented by case studies or problem-
specific articles of interest to the class, which can now be analyzed in a
structured way based using the framework in the book.
(c) An ethics-across-the-curriculum program, for which the book provides a
common set of ethical concepts and a wide variety of examples. A
for
Business Ethics as Rational Choice
Published by Pearson Prentice-Hall
John Hooker
Carnegie Mellon University
August 2010
1
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
, Contents
Part I – How to Use the Book 1
The Book’s Approach 1
Classroom Use 2
Using the Expository Material 3
Using the Exercises 7
Using the Case Studies 9
A Note on Rational Choice Theory 11
A Note on Moral Epistemology 10
Part II – Exercise Solutions 13
Chapter 2 13
Chapter 3 28
Chapter 4 31
Chapter 5 59
Chapter 6 73
, Part I – How to Use the Book
The Book’s Approach
Business Ethics as Rational Choice is based on the premise that ethics can be
learned in basically the same way as engineering or mathematics. It presents the
theory and then asks students to work exercises until they learn how to apply it.
Ethical decision making, like any skill, is developed through structured practice.
The aim is to bridge the gap between theory and application. Approaching ethics
from a purely philosophical perspective that presents Kant and Aristotle may fail
to provide specific guidance in a messy real-world situation. Coming from a
practical perspective that discusses real-life case studies may offer no principled
method for analyzing them. The book attempts a rational reconstruction of
normative ethics that is robust and precise enough to obtain results in real
situations.
The book’s central theme is that ethical behavior is rational behavior, in a
sufficiently broad sense of rationality. The book resists the popular tendency to
equate rational behavior with rational self-interest. It argues that failing to
consider the interests of others is irrational, not because it may eventually hurt
one’s own interests, but because it is inherently illogical and self-contradictory.
This leads to specific conditions that a rational decision must meet. Students are
asked to evaluate whether a given decision is ethical by subjecting it to these tests.
No theory can be understood or appreciated until it is forced to deal with the
subtleties and surprises of real-world application. Think about Maxwell’s
equations in physics, or the conservation of energy principle. They are easily
stated, but science and engineering students spend years grinding through
countless exercises before they can apply them usefully and appreciate their
power. The proposed book likewise takes students through exercises that show
how to apply ethical theory and gradually reveal its full meaning and
implications. Students are cautioned that analysis of this kind rarely yields a final
or complete solution, but it can allow one to make some progress toward
resolving an issue, rather than going around in circles, as so often happens in
ethical disputes.
The analyses in the book attempt to set an example of intellectual discipline.
They avoid invoking arguments that may sound convincing but do not apply the
conditions of rational choice. Students are asked to follow this example. They
quickly learn that they cannot simply sit around and exchange views, as they
might have expected to do in ethics class, but must defend their views with
intellectual rigor.
, Students may not initially prefer this approach. It is nothing like the ethics course
they imagined. In time, however, they may come to realize that these concepts
fill a gap in their conceptual equipment and provide them a vocabulary for
discussing ethics. They may begin to give the material the kind of respect they
give chemistry or mathematics. They may enjoy the intellectual challenge of
solving ethical puzzles. They may find it satisfying to be able to work through
dilemmas and actually make some progress toward a defensible conclusion.
To earn credibility, however, it is essential that the case studies and exercises be
absolutely realistic. I pursued this goal throughout the book. The scenarios come
from several sources, including my MBA students and executive education
participants (I have a collection of some 200 dilemmas they submitted
anonymously, although many of them are similar). I don’t clean up the scenarios
to simplify the analysis or to make them more effective pedagogically. I take
them as they come.
Classroom Use
The book is not intended to be a comprehensive resource for business ethics
instruction. It contains no full-length case studies and no sections dedicated to
such specific problem areas as employee rights, sustainability, product safety,
marketing ethics, accounting ethics, or whistle-blowing. It is focused on building
skills that, in my view, are a prerequisite to everything else. Certainly ethics is
much more than logic-chopping. It also rests on experience, judgment, and
domain-specific knowledge, and case studies and problem-specific materials can
play a role in developing these. Yet in ethics, as in finance or operations,
judgment and experience are built on an analytic foundation. This text provides
the materials for the foundation.
I developed the materials over several years for the ethics program at the Tepper
School of Business at Carnegie Mellon University. They evolved from
interaction with students at undergraduate, MBA, and executive levels. Based on
this experience, I believe the book is suitable for the following classroom
situations:
(a) A short business ethics course or module that is dedicated to skill building
rather than the case study method. I use the materials in required and
elective ethics modules at the undergraduate and MBA levels. The
modules have varied in length from three to seven 80-minute sessions.
(b) A full course in business ethics that focuses, at least in part, on decision-
making skills. The book can be supplemented by case studies or problem-
specific articles of interest to the class, which can now be analyzed in a
structured way based using the framework in the book.
(c) An ethics-across-the-curriculum program, for which the book provides a
common set of ethical concepts and a wide variety of examples. A
