[ExI] Restructuring executive compensation

Max More max at maxmore.com
Sat May 30 16:49:43 UTC 2009

While I think there is value in the high-level discussions of what 
caused the financial mess and ensuing economic contraction, not 
enough attention on this list has been given to the specifics. While 
I agree with those who point the finger at government policies 
(including those of the Fed and Freddie Mac, Fanny Mae, etc), I also 
agree that the market economy does experience swings. These are not 
necessarily bad, but smoothing them out a bit is probably good -- 
making economic coordination easier and reducing the costs of 
misallocated resources.

One factor that no doubt contributed to the problems is the way 
executive compensation has been incentivizing executives to take on 
excessive risk in pursuit of short-term gains. That is *not* inherent 
in the market system; it's a result of the specific compensation 
schemes used. Four authors have recently published a working paper 
suggesting a better compensation scheme. My review is here:

"Dynamic Incentive Accounts"


Max More, Ph.D.
Strategic Philosopher
Extropy Institute Founder
max at maxmore.com

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