How Virtual Reality Can Help Bankers Become More Empathetic And More Ethical

The scandals in the financial industry have thus far been beyond the law's power to prevent. Many constituencies have suffered significant harm, including those dealing with financial institutions, and many others. Indeed, the institutions themselves have also been adversely affected. Bank culture is apparently in significant part to blame. Banks hire, and promote and otherwise incentivize, train, and discipline and fire, employees in ways that encourage them to be heedless of the consequences of their actions - to third parties and sometimes, even to the banks themselves. The craft of gaming financial rules, formulas, and covenants is lauded, as are other activities that violate the spirit of the law while honoring its letter. The corporate form allows bankers and banks to get the benefits of risk-taking while limiting their exposure to the associated costs. The result is predictable, and becomes embedded in the banks' ethos. Bankers readily experience the proximate results of what they do - the bonuses and promotions, the admiration of their peers and the camaraderie of their work-groups engaged in a collective task, and their own internal pride - but may not be willing or even able to make the imaginative leap to the less proximate effects. Lack of cognitive and affective empathy (the former meaning not knowing about others' reactions, and the latter meaning not caring) may be a big reason why. This piece asks the reader to engage in a thought experiment: What if bankers could be made more aware of the consequences of their actions by the use of virtual reality?