The NY Times had this editorial today about incentive bonuses. In the article, he presents seemingly strong evidence that bonuses shouldn’t matter. In experiments in India and MIT, participants who were offered truly substantial rewards performed *worse* than people who were offered small rewards. His conclusion: don’t pay large performance bonuses to investment bankers.
I take exception to the author’s interpretation of the experiments. It misunderstands how incentives operate. Offering higher rewards doesn’t necessarily make individuals perform better. I can only run so fast, and try as I might, I can’t shave a minute off my fastest mile run even if you offer me $1 million or even $1 billion.
However, there are runners out there who can beat my time 60 seconds or more. And some of them are doing more lucrative things, like professional sports or even investment banking etc. If you offered them the right price, you might be able to get them to leave those other jobs and participate in your race.
So, Dan Ariely is way off the mark in drawing the conclusion that investment banks could perform just as well without performance bonuses. Run back to the Ivory Tower at Duke, Dan!
I am rational, integrated, and efficacious. So far, I’ve never met a person who lives up to the standard I hold for myself (except online).
I take my relationships seriously. I am simply not attracted to many of the women in this world. I do not “hook-up” with girls. I only kiss those who deserve, and so far I have only encountered one who did. I would love to find someone I can learn something from; someone who challenges me to think; someone I can feel like I’ve won, rather than lowered myself to.
- Zak, Long Island, New York
What girl would not respond, “pick me, pick me – please let me be worthy!”? I guess we ought to be concerned, as Cass Sunstein argues, about polarization in the Internet age.
I think I understand a little more why my mom was upset about the previous prank on Palin. I saw the coverage of this scandal on O’Reilly, and I was in total disbelief. I commented to my wife, “it must be a hatchet job.” But I meant by a Republican insider, not a prankster.
Quickly recapped: Fox reported that Palin (1) thought that Africa was a nation, not a continent; (2) couldn’t recall the countries in NAFTA; and (3) had a fit every morning about her press coverage. Now, it turns out the anonymous source for the story was a prankster.
This prank, in my opinion, wasn’t funny. It just harms everyone: the media, candidates and viewers. The media were duped, so they look stupid. Palin was slandered. And it preys on and exposes the prejudices of voters and viewers.
This map is really cool. It uses a color from red to blue to show the relative vote share of republicans and democrats. Most interestingly, it rescales the map so that area is equivalent to population, not land mass. Check out the whole page for other neat ones too.
Here is a snippet of what Nate Silver, author of FiveThirtyEight.com has to say about the election tomorrow:
7pm EST Virginia, for my money, is the most important state in this election. If John McCain loses it, his path to victory is exceptionally narrow—he would need to pull out an upset in Pennsylvania, while holding on to Florida and Ohio, and avoiding a sweep out West. Barack Obama has considerably more ways to win without Virginia, but a failure to close out the state would suggest at best a more circuitous route to victory. As Obama remains about five points ahead in most polls of Virginia, what we’re really looking for is a quick call on anything before 8 PM that would indicate that the map has indeed changed from 2004, and not in McCain’s favor.
Read the whole thing. It gives an hour by hour analysis of what to look for as the results come in.