Legal Ethics

Behavioral psychology suggests how lawyers can combat questionable trading

Behavioral psychology suggests that lawyers can have an influence on traders’ troubling behavior, according to a researcher in the field.

Human decisions can be influenced by “morality reminders,” according to a New York Times DealBook article by Doug Steiner, a financial services strategy consultant and a partner at a behavioral economics firm. For example, a person filling out a form might be reminded that “over 99 percent of people truthfully answer these questions.”

Steiner says similar behavioral psychology could be used in financial services transactions, and offers this example involving lawyers: “Financial institutions rely on their lawyers to determine what traders can ‘get away with.’ Legal opinions that seem to countenance aggressive trading can reinforce troubling behavior on the part of traders and their firms. Showing lawyers the profound influence they have on trading action might dissuade them from endorsing or seeming to endorse questionable decisions.”

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