Alan S. Blinder, Professor of Economics, Princeton University
In my day job, I hob-nob with lots of financial types, including guys who invest and manage Other People's Money ("OPM"). Mr. Blinder has nailed it - when gains accrue to the gambler but losses are absorbed by others, it is rational to gamble like a drunken sailor, all day, every day. The Other People providing the Money have to step up and figure out a way to make the gamblers suffer the losses. That will do more to moderate booms and busts than all the regulations, past and future, that the government might dream up.Thursday, May 28, 2009
Quote of the Day
"The source of the problem is really quite simple: Give smart people go-for-broke incentives and they will go for broke. Duh."
Labels:
Blinder,
compensation,
Economics,
gamblers,
incentives,
money
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment