The process you are discussing is better summarized as: "a Nash equilibrium is not necessarily Pareto optimal, and vice versa." That's the issue with making it about ethics versus success: most successful people just aren't ethical. Entire companies are built around "cheating", and it is often seen as a good business strategy (e.g., Walmart running a store at a deficit to put competitors out of business).

Want people to stop cheating? Fix the incentives. Stop using a points evaluation system, and curves. The professor in this article managed to redesign his assignments to more or less make cheating difficult, and suddenly it was less of a problem. Imagine that!