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Game theory shows why sexual misconduct is underreported

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Ing-Haw Cheng

The idea that there’s safety in numbers was a major driver behind the #MeToo movement, which encouraged people who had been targets of sexual misconduct to come forward.

While there have been many heated debates about why people who have experienced abuse don’t report, a pair of economists used their academic discipline’s tools to dispassionately explain why underreporting is at its highest when misconduct is widespread, and why awareness-raising campaigns like #MeToo can help.

“There are real economic reasons why people don’t come forward,” says Ing-Haw Cheng, an associate professor of finance at the University of Toronto’s Rotman School of Management who co-authored the research with Alice Hsiaw of Brandeis University.

The pair built a model of the decision to report using game theory, which applies mathematics to represent situations where the outcome for each individual’s decision is affected by everybody else’s choices.

In an environment where sexual misconduct by one or more individuals is an open secret, those who have been their targets face uncertainty over whether others will come forward. If one person chooses to report misconduct, they do not know if their information will be backed by other reports, or if it will be an outlier, weakening their credibility and making them vulnerable to reprisals. In the language of game theory, the complainant who sticks their neck out to report faces a “first mover disadvantage,” with significant potential costs.

"Uncertainty over whether others will come forward can be so strong that no one will report even when misconduct is widespread, creating a 'culture of silence,'” says Cheng.

Reporting improves when individuals are aware that other reports have been made, when problematic behaviour is penalized, or when people who have been targeted by sexual misconduct receive damage awards, such as through a lawsuit, the model shows.

However, it also shows that movements like #MeToo can have unintended consequences, something  Cheng says are unavoidable. As awareness of sexual misconduct rises, some managers choose not to act as mentors to junior employees. If those managers have a tendency towards misconduct, it reduces the number of incidents and the number of reports, leading once again to reluctance to report. If the managers who shy away from mentoring behave ethically, junior employees lose out by not having access to good mentors.

Some organizations attempt to deal with the uncertainty hurdle through a “holding tank” system where misconduct reports are received and held confidentially, but only acted on once there are multiple complaints for an individual. However, the researchers found that the approach does not always help because complainants may again be unsure whether their report will lead to action.

The findings are useful for understanding how to overcome the culture of silence that prevents people from speaking up when they see behaviour that runs counter to a group or organization’s rules, ethics or values.

“A model in economics provides a chain of logic that rests on a set of assumptions,” says Cheng. “We can use this as a basis for a sensible conversation in an emotionally charged topic.”

The paper appears in the November issue of American Economic Journal: Microeconomics.

Ing-Haw Cheng is an associate professor of finance at Rotman. He researches how beliefs and incentives affect capital markets and the economy.