Why Finance Attracts The Least Trustworthy Among Us

Published by Bloomberg | March 23, 2022

A study of German university students finds that those with low scores in a trust game are more likely to go to work in the financial sector. Does that matter?

Former Goldman Sachs banker Tim Leissner has been fessing up to an awful lot of dishonest behavior lately.

Under questioning from both the prosecution and defense, Leissner admitted to faking divorce documents, creating phony email accounts, marrying multiple women at once and keeping money that wasn’t his.

That’s just a brief summation from an article by Patricia Hurtado of Bloomberg News that also includes a fun bullet-pointed list of Leissner’s “Web of Lies.” For the jury in the trial of Roger Ng over his alleged role in the looting of Malaysian sovereign wealth fund 1MDB, the serial prevarications of Ng’s former boss Leissner (who already pleaded guilty) present some challenges in determining how seriously to take his testimony.

For the rest of us, they raise some interesting questions. Was Leissner, once the Southeast Asia chairman of the world’s most prestigious financial institution, a total outlier? Or was his boundary-pushing and lack of trustworthiness just on the extreme end of a financial-industry continuum that includes a lot of other dodgy behavior?

There’s a new(ish) paper by four business and economics professors based in Germany and Austria that attempts to answer this, sort of. A version recently accepted for publication in the journal Management Science is titled “Social Preferences of Young Professionals and the Financial Industry,” while there’s an earlier, paywall-free draft called “Trustworthiness in the Financial Industry.” The key finding is that university students who score low in trustworthiness in a simple game are more likely than others to end up working in finance.

You probably want to know more about that game.

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