Incentives
by nicole and · updated 4mo ago
Incentives
- One thing I didn’t realize until later in life is how the incentives of an industry shape your mood, your outlook, and even your character. In early stage investing, the incentives reward optimists, so it literally pays to keep an optimistic outlook. In journalism, the opposite… Show more
sari added 6mo ago
- 33% of British criminals were dying en route to Australia in the 1700s.
Britain switched from paying sea captains for every passenger who walked on the ship to paying them for every passenger who walked off. Immediately, the survival rate shot up to 99%.andrea added 9mo ago
sari added 2y ago
- It is difficult to get a man to understand something, when his salary depends on his not understanding it. – Upton Sinclair
sari added 1y ago
sari added 2y ago
andrea added 1y ago
You hire a contractor to fix your house, his incentive is to waste your money while yours isn't. You hire a financial advisor, her incentive is to get more fees. You get an investment advisor, they also want to get fees, plus a cut of the profits.
This is the principal agent problem, where the agent knows how to do something and often knows more, and you have to figure out how to trust them. Often, the biggest worry is getting ripped off, because the agents don’t mind if you lose your money or if you lose your floorboards, as the way they get paid is weighted towards the upside. The agents have a floor in terms of downside exposure, while principals like you want to be more prudent with money.
alex added 4mo ago
Incentives are everything.
nicole added 2y ago
Keely Adler added 2y ago
- Tackle the Monkey First: "Let’s say you’re trying to teach a monkey how to recite Shakespeare while on a pedestal. How should you allocate your time and money between training the monkey and building the pedestal? The right answer, of course, is to spend zero time thinking about the pedestal. But I bet at least a couple of people will rush off a... See more
sari added 1y ago
