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The Incentive Bubble

A medium-length piece from the Harvard Business Review makes an important point:

"The point here is more specific: Financial markets cannot be relied upon in simple ways to evaluate and compensate individuals because they can’t easily disentangle skill from luck. Widespread outsourcing of those functions to markets has skewed incentives and provided huge windfalls for individuals who now consider themselves entitled to such rewards. Until the financial-incentive bubble is popped, we can expect misallocations of financial, real, and human capital to continue. The misplaced incentives are simply too powerful."

http://hbr.org/2012/03/the-incentive-bubble/ar/pr