On The Folly Of Rewarding A While Hoping For B: An Academy Classic
This is the kind of article Charlie Munger would recommend reading. Think of corporate excesses, compensations (stock options), Chinese walls at ibanks etc.
This might be one of my favorite papers of the year!!! *Post dedicated to Joe Koster, James Montier, & Charlie Munger.
Click Here To Read On The Folly Of Rewarding A While Hoping For B: An Academy Classic ( AS PDF)
Abstract (Via Okland.EDU)
Whether dealing with mokeys, rats, or human beings, it is hardly controversial to state that most organisms seek information concerning what activities are rewarded, and then seek to do (or at least pretend to do) those things, often to the virtual exclusion of activities not rewarded. The extent to which this occurs of course will depend on the percieved attractiveness of the rewards offered, but neither operant nor expectacnty theorists would quarrel with the essence of this notion.
Very Important!!!
“Nevertheless, numerous examples exist of reward systems that are fouled up in that the types of behavior rewarded are those which the rewarder is trying to discourage, while the behavior desired is not being rewarded at all. “
Click Here To Read On The Folly Of Rewarding A While Hoping For B: An Academy Classic ( AS PDF)
