Based upon the theory of moral stages devised by educational psychologist Lawrence Kohlberg, this report examines the influence of the social situation on principled moral reasoning and on cheating. Research assessed the level of moral reasoning for 152 college juniors and seniors using Rest's Defining Issues Test (1976) in which levels of low, medium and high corresponded to Kohlberg's preconventional, conventional, and principled stages. Half the subjects took the Hartshorne and May Circles Test (in which they are given five tries to memorize the location of ten circles on a sheet of paper and then to write the numbers in the corresponding circles with their eyes closed) in a high-threat, high supervision situation. The other half took the test in a low-threat, low-supervision situation. Controls were established by administering the test to 67 blindfolded undergraduates, computing a mean score, and establishing a score categorized as cheating. Results indicate that lows cheated significantly more than either Mediums or Highs; however, a relationship was found between principled moral reasoning only in the high threat, high-supervision situation in which none of the ten Highs cheated. The conclusion is that variations in a moral conduct situation may influence the behavior of principled subjects, depending upon how the two different situations are preceived by the subjects. (KC)