"Sleep-test ethics" refers to a concept of ethical evaluation that is based on one's personal instincts, which could also be called one's "gut feelings" or "moral compass." The idea is that if someone can (theoretically) sleep with sound conscience after taking some action, then that action must have been morally just. Of course the idea shouldn't be taken literally, as one's ability to sleep well is not a direct reflection of morality or the consequence of any one action.
The strictest interpretation of sleep-test ethics, called "me-ism," holds that morality is completely subjective to the evaluator, and thus whatever feels right for someone is morally right (to that person).
Greek philosopher Aristotle subscribed to a version of sleep-test ethics, placing value on one's innate sense of morality. Where he differed from either general or strict interpretations of the concept, though, is that he believed several variables must be controlled for the moral evaluation to be accurate/valid. The issue at hand could not be an individual compulsion. The evaluator must be of a certain level of quality, mature and thoughtful, of good character. Ultimately, he believed moral instinct was secondary (and even reactionary) to logic, common sense, and relevant facts. Further, he believed that correct moral intuition drew upon socially acceptable behavior and customs. In summary, Aristotle's sleep-test ethics were a far cry from the typical concept—a highly (and scientifically) regulated, elitist/meritocratic version of the idea.