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Perverse Incentives: Risk Taking And Reform, Aaron J. Unterman

Aaron J. Unterman

The common theme that ties the financial crisis (and this article) together is one of misguided incentives that pervaded the finance industry and perverted the actions of individuals and institutions resulting in a global crisis with severely deleterious social effects. In the world of finance, the greatest way to achieve a dramatic increase in wealth is to take large risks, of course, this is also the easiest way to lose it. A great deal of the so-called financial innovation that we experienced preceding the crisis was devoted to finding ways to take on as much risk as possible. The rise …