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According to Self-Maintenance theory, people notice their dishonest acts, and thus experience ethical dissonance between heir misconduct and their positive moral self. In this view, dishonesty is facilitated by justifications that redefine moral boundaries. By contrast, the Bounded Ethicality approach suggests that biased perception prevents people from becoming aware of their dishonesty. We tested the key process assumptions behind these accounts using pupillary responses and fixation data and found physiological evidence for both kinds of mechanisms. Specifically, physiological arousal increased in cheating responses, but was attenuated by the level of ethical dissonance, suggesting that people are somewhat aware of their wrongdoings. At the same time, we found attentional biases that reduced the likelihood for detecting potentially disadvantageous information. We conclude that dishonest acts come at the internal cost of increased tension, which people aim to avoid by preemptive biased processing as well as post-hoc justifications.