In India, the shame is not in wrong conduct as much as it is in being caught says V. Raghunathan

There are two competing vegetable vendors in your neighbourhood. One of them shuts shop and hence, the other raises his average prices by, say 15 per cent. Will you go to another vendor, say 10 minutes away from your neighbourhood to spurn the exploitative vendor?

Although a rather mild example of ‘wrong-doing’, the example is illustrative. While a much larger proportion of students in my international classes from other countries respond in the affirmative to the question above, Indian students are more given to continuing with the old vendor unless the cost (of time and transportation) of going to the other vendor 10 minutes away is less than the value of the 15 per cent hike. Others even argue that it is perfectly justifiable on the part of the vendor to hike his prices in terms of rules of competition. But a far fewer percentage of Indian students are willing to go those extra 10 minutes just to punish the vendor for his exploitative price hike. It seems that the sole motivator for our behaviour is: ‘what does it cost me?’ rather than larger considerations of right and wrong behaviourand punishing wrong conduct.

In the 1970s, Robert Axelrod, the renowned mathematician and political scientist, ran an interesting experiment involving iterative Prisoner’s Dilemma (http://www.youtube.com/watch?v=kld-H9Hei5c). The situation involved a large number of individuals interacting with each other randomly, cooperating or defecting (exchanging a token with a C or a D written on it) against one another, every time they come in contact. When both cooperate with each other, each gains 2 satisfaction points; when one cooperates and the other defects, the defector gains 4 points (for getting something in exchange for nothing), while the cooperator gets -1, or loses one point (as it stings to be cheated). When both defect against each, no one gains or loses any point. Axelrod invited competitors worldwide to enter their strategies for accumulating maximum points in this situation.

It turns out that after repeatedly playing eachentry against the other hundreds of times, and increasing the weightage of the winning strategies in every succeeding generation of the play-offs to mimic successful genes in biological evolution, the strategy that emerged as the best in maximising the satisfaction points was the simplest: Tit for Tat. This strategy is simple: Never be the first to defect against any other individual. But thereafter, in all subsequent interactions with that individual, cooperate or defect, mimicking exactly what the other did in the previous interaction. Thus if someone cooperated in the previous interaction, then in your next iteration continue to cooperate with him; and if he defected (or cheated, or flouted rules) on you when you had cooperated, you should punish him when you interact with him again.

This simple rule – ‘Tit for Tat’ strategy – invariably fares better than ‘generous rules’ like ‘giving a second chance to a defector’. The reasons are not difficult to fathom. A strategy that ‘gives a second chance’ is exactly the kind of opening that a villainous strategist looks to exploit, so as to enhance those four points into his kitty. On the other hand, by promptly punishing a wrong-doer, Tit for Tat allows no room for further exploitation (for more details, see Games Indians Play, Penguin India, 2006).

If companies take this simple lesson to heart and eschew giving ‘a second chance’ to wrong doers, they would prevent the wrong doers from exploiting them by their wrongful conduct a second time (and may be a third or a fourth time…) for personal benefit, thus compromising the corporate reputation.

When a corporate hires a CEO (or any employee) with a previous track-record of unprofessional or improper conduct, is the corporate simply winking at the misconduct, especially certain kinds of misconducts? Or is it merely giving the offender a second chance for a human foible? Or is it a manifestation of the Indian phenomenon of being highly tolerant of people who break rules, laws or codes of conduct? Or is it all of the above?

The answers by now should be obvious. All of these are clearly suboptimal strategies for the overall good of the society. The optimal strategy should always be: Punish the wrong-doers.

Our propensity to explicitly or implicitly justify the actions of wrong-doers, followed by our reluctance to punish them, especially if the punishment to be meted out involves the slightest cost to us – like walking those extra 10 minutes, seems to distinguish us from the rest of the civilised world. So when Indian or Indian-run corporates hire a CEO with a previously known track record of misconduct, but who promises to bring them benefits, they merely reflect the same tendency.

And lastly, the culture of Indian wrong-doers is also unique. While elsewhere in the world, more often than not, when caught on a wrongful act the wrong-doers are contrite, apologetic and ready to face their punishment, the Indian ethos seem to be different. Here, the shame is not in the wrong conduct as much as in being caught at it or in accepting the wrongful conduct. That is why when a Rajat Gupta or a Mohammad Azharuddin or a Srinivasan or a Phaneesh Murthy is caught in wrongful conduct, we are not beyond playing the victimisation card for being an Indian, a Muslim, a Madrassi, or simply a male (‘exploited by fortune-hunting females’) forgetting that the relevant society never discriminated against their national, religious, regional or gender affiliation when it rewarded them with high status in the first place!

V. Raghunathan is an academic, a popular author, a columnist and a responsible corporate citizen and can be reached at v.raghunathan@gmail.com