Most of us probably think we are honest and in control of our own decisions—but not so fast!—Dan Ariely, Duke University professor of psychology and behavioral economics, offers another and quite provocative view.

I’ve been a long-time fan of Ariely since reading his book Predictably Irrational. And his talks on TED have been viewed about three million times. He is also the author of The Upside of Irrationality; his most recent book is The (Honest) Truth About Dishonesty: How We Lie to Everyone – Especially Ourselves.

His thesis? Dishonesty is both interesting and can often be quite creative; plus, we often lie or cheat—a least a little bit—in our personal and business relationships. “We cheat up to a level that allows us to retain our self-image as reasonably honest individuals,” he writes. There’s a duality that occurs in our thinking and attitudes, he continues, which he calls our “amazing cognitive flexibility.” That’s actually a useful skill because “as long we cheat by only a little bit, we can benefit from cheating and still view ourselves as marvelous human beings.”

Ariely basically is describing the process of rationalization, a balancing act that is a major part of the human psyche. Most of us have limits that govern the cheating threshold—before that activity becomes “sinful” or illegal.

Ariely writes about the conflicts of interest that can blind our motivations – something he calls “wishful blindness” which he says is often very hard to overcome once these internal conflicts of interest “fundamentally color our view of the world.” Here is a short talk by him on TED:

A good example of conflict of interest in action is described in his book. Ariely cites the dentist who purchases a new piece of equipment. No doubt the dentist believes it will help him improve patient care. But the equipment likely is also quite expensive, and he or she wants to recoup the investment by using the new technology. “So consciously or not, he looks for ways to do so, and voila! The patient ends up with a crown—sometimes necessary, sometimes not.”

Sound familiar? Is the dentist a bad person? Probably not. Is he dishonest about his motivations? Perhaps a little bit, and that’s Ariely’s point: the human mind is quirky, and we bring that quirkiness to our business relationships.

So how do we deal with that? Ariely stresses the importance of setting rules that “safeguard ourselves from ourselves” and the perverse urges and activities that can harm or destroy business relationships.

That’s where I believe following a Vested approach helps immensely – because the Vested approach helps organizations proactively apply “rules” that are safeguards to make sure your business relationship stays on course despite the dynamic nature of business. For those that have adopted a Vested approach, you will easily recognize how following the Vested Five Rules and 10 contractual elements embed safeguards into your commercial agreement and relationship.

There is so much that I am fascinated with in Ariely’s book that I am sure to share more of his excellent work in future posts.

Image: Dan Ariely – PopTech 2010 by Pop Tech via Flickr cc