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A behavioral economist explains why Elizabeth Holmes might not have felt bad lying about Theranos

Published by Business Insider on Wed, 20 Mar 2019


A new HBO documentary by filmmaker Alex Gibney, "The Inventor: Out for Blood in Silicon Valley," explores the downfall of the blood-testing startup Theranos and its founder, Elizabeth Holmes.In the documentary, Gibney interviewed behavioral economist Dan Ariely about an experiment on the psychology of lying.Participants in the experiment were more likely to lie on behalf of charity than for their own gain, and their responses on a lie detector suggested they were more comfortable doing so when they felt like they were being altruistic.This suggests that it may be easier for people to be dishonest if they think it's for a good cause, as Holmes is accused of doing.Elizabeth Holmes, founder of the now-defunct startup Theranos, has been accused of fraudulently claiming that her company's technology could perform health tests using only a small amount of blood.It turns out there is psychological evidence that people can lie while convincing themselves they're still doing the right thing, if they view it in the service of a good cause.In his new HBO documentary "The Inventor: Out for Blood in Silicon Valley," filmmaker Alex Gibney explores the downfall of Holmes and Theranos.Duke University behavioral economist Dan Ariely is one of the main voices in the documentary. He described a psychology experiment to Gibney that could shed some light on how people justify dishonest behavior to themselves.The experiment is fairly simple. Participants roll a standard six-sided die, and before the die is rolled, they are asked to silently choose whether the top or bottom number on the die will be higher. After the die is rolled, the participant tells the experimenter which side of the die they chose, and are then paid a small amount of money based on the number on that side of the die.A perfectly honest participant who chooses a side before rolling the die and then faithfully reports her choice no matter the outcome should end up choosing the more favorable side of the diethe side with a higher number on it, and thus a higher financial rewardaround half the time. A completely dishonest participant, on the other hand, will always report whichever side of the die is higher, regardless of what side he chose before rolling.Ariely told Gibney that, unsurprisingly, people tended to cheat at least some of the time in this task, choosing the more favorable side of the die at a higher rate than would be expected from chance.Read more: How Elizabeth Holmes convinced powerful men like Henry Kissinger, James Mattis, and George Shultz to sit on the board of now disgraced blood-testing startup TheranosIn a twist to the experiment, Ariely hooked up participants to a lie detector while playing the die game. He found that, generally, the lie detector could tell when participants were dishonestly choosing the favorable side of the die.But then, Ariely introduced a further complication to the experiment that illustrates how a sense of doing something for the greater good can impair someone's honesty.Instead of receiving the money themselves, participants were told that the money won playing the die game would go to the charity of their choice. In this version of the experiment, Ariely said that participants lied more often to get bigger financial rewards for the charityand the lie detector was no longer able to reliably tell when participants were being dishonest.Ariely offered Gibney an explanation for why the lie detector stopped working when participants were playing for charity. "The lie detector detects tension. 'I want more money, but I think it's wrong.' But if it's not wrong, why would you worry' If it's for a good cause, you can still think you're a good person."This notion illustrates how it's possible for someone to commit fraud, as Holmes is accused of doing, while still believing fully in one's actions. Cheating in the service of altruism isn't "really" cheating, and is therefore morally justifiable.Gibney expressed such a view of Holmes in an interview with Recode's Peter Kafka. Gibney told Kafka, "I think she believed in the mission. I also think she believed in the idea of who she was, right' But sometimes, thats not the good news, its actually the bad news, because its a variation of the end justifies the means, right'Read more:The mysterious story of former Theranos president Sunny Balwani, who was in a relationship with Elizabeth Holmes and now faces criminal chargesWhy Theranos founder Elizabeth Holmes wasn't interviewed for HBO's 'The Inventor' documentaryFrom Silicon Valley superstar to facing jail time on fraud charges, here's where Theranos founder Elizabeth Holmes is nowThe most shocking part of HBO's Theranos documentary, 'The Inventor,' according to director Alex GibneyJoin the conversation about this storyNOW WATCH: Elon Musk sent a $100K Tesla Roadster to space a year ago. It has now traveled farther than any other car in history.
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