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Ethical decision-making is the process of aligning actions with established principles to maintain consistency in values and professional conduct. It incorporates two primary perspectives: the normative approach and the psychological approach.

The normative approach defines explicit standards for ethical behavior, emphasizing principles such as honesty, fairness, and accountability. This perspective provides a clear framework for distinguishing right from wrong and ensures that actions prioritize ethical integrity and responsibility over self-interest. It applies across personal and professional contexts, guiding individuals and organizations to act in ways that uphold societal and moral standards.

The psychological approach analyzes real-life decision-making processes by examining personal motivations, situational influences, and cognitive biases. This perspective highlights the complexities of ethical decision-making, where ideal principles may conflict with practical constraints or pressures. It acknowledges that ethical dilemmas often arise due to competing values and emotional influences.

Balancing these perspectives is essential for effective ethical decision-making. Integrating normative ideals with psychological insights helps individuals navigate the tension between moral behavior and real-world challenges. This approach fosters accountability, consistency, and integrity in thought and action.

From Chapter 14:

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14.3 : Psychological and Descriptive Understanding of Ethical Decision Making

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14.1 : Ethics in the Financial and Investment Industry

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14.2 : Defining Ethics and What Is Ethical

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14.4 : Individual Ethical Development

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14.5 : Ethics-Related Individual Characteristics

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14.6 : Implicit Individual Processes

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14.7 : Social Influences on Ethics

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14.8 : Groups and Ethics

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14.9 : Power, Leadership, and Ethics

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14.10 : Organizational Culture and Ethics

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14.11 : Compensation and Incentive Structures

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14.12 : Ethics Training

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