Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, at a courthouse in New York, US, Aug 11, 2023. date back to the company’s very beginning, prosecutors say. He lied to customers and investors alike, it is claimed, as part of what United States Attorney Damian Williams has called “one of the biggest financial frauds in American history".A new study in the Strategic Management Journal sheds some light on the issue.
Our results were striking. We found that analysts were far more likely to give “buy” or “strong buy” recommendations after listening to deceptive CEOs – by nearly 28 percentage points, on average – rather than their more honest counterparts. What’s more, we found that elevated status fosters a stronger truth bias. First, “all-star” analysts often gain a sense of overconfidence and entitlement as they rise in prestige. They start to believe they’re less likely to be deceived, leading them to take CEOs at face value.
It’s important to note that the tool doesn’t directly measure deception; it identifies language patterns associated with lying. This means that even though it’s highly accurate, it’s susceptible to both false positives and negatives – and false allegations of dishonesty in particular could have devastating consequences.
The widespread use of AI to catch lies would have profound social implications – most notably, by making it harder for the powerful to lie without consequence.