Moral Hazard
Once a party is insulated from the downside, its behaviour changes: risk is taken because someone else carries the loss. Deposit insurance, bailouts, and option-heavy compensation all create it, and the effect appears only after the fact. Ask who eats the loss before assuming anyone is being careful.
6 books · 4 people behind it · 4 resources
Start here
- The Big ShortMichael Lewis, 2010
- Too Big to FailAndrew Ross Sorkin, 2009
- Fault LinesRaghuram G. Rajan, 2010
The people behind it 4
Each person holds a book in this entry or names it in their own tags.
Academics 1
Journalists 3
Resources 4
- Easy MoneyHoward Marks · memo · What cheap capital does to discipline and returns.
- Bias from Incentives and ReinforcementShane Parrish · essay · Munger's claim that incentives reshape sincere belief.
- The Impact of DebtHoward Marks · memo · Leverage magnifies outcomes and shortens survival.
- Iatrogenics: Harm Done by the HealerShane Parrish · essay · Intervention that does more damage than the disease.
Books 6
Andrew Ross Sorkin · 2009
