Reputational Capital and Incentives in Organizations

Rajiv Sethi offers a fascinating discussion of the incentives involved in paying people zillions of dollars to lie, cheat, and steal. I’d been aware for a long time of the general problem of the system of one-way bets in which purported risk-takers can make huge fortunes with little personal risks, but Rajiv and his commenters go further by getting into the specifics of management at financial firms.