One of the core assumptions of a social psychological view of evil and good is that the situation--meaning, the setting, including people in that setting--significantly shapes behavior. "The Power of the Situation," has nearly become the subtitle of the field. It stands in stark contrast to much of psychology's misplace trust in the power of the person: the idea that personal qualities, such as traits, shape behavior. They usually don't. Mostly, people respond to the situation, as Milgram, Asch, and Hitler all discovered.
But social psychologists don't really believe in situationism: that behavior is caused by external, environmental factors. They do believe in interactionism: the idea that situational factors interact with personal factors to create behavior. Situations sometimes push people around like pawns on a chess board. But, more often, people actively process the information available in the situation and in their own memories of such situations, and their reactions to the situation are influenced by the results of that processing. Clearly, the situation isn't all that matters: its the particular person in the situation that matters. That's interactionism.
This interactional approach to understanding good and bad is demonstrated in a number of studies of people's behavior when pressured by others, and by a situation. Asch (1955) showed that people will make errors when making simple judgments, if they are in a group that makes errrors. Newcomb discovered that people tend to adopt the values and beliefs of those around them, even if these values conflict with those taught to them by their families and communities. Two studies, however, stand out as the strongest empirical demonstrations of the power of the situation: The Milgram Study (1963) and the Zimbardo Prison Experiment (1971).
Fraternities and Sororities: Good or Evil? What impact does being a member of a Greek organization on a college campus have on the behavior of the individuals involved?
References:
Asch, S. E. (1955). Opinions and social pressure. Scientific American, 193, 31-35.
Milgram, S. (1963). Behavioral study of obedience, Journal of Abnormal and Social Psychology, 67, 371-378.
Zimbardo, P. (2007). The lucifer effect: Understanding how good people turn evil. New York, NY: Random House.