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.: April 2009 --> Minimizing the likelihood of large-scale destructive events

Minimizing the likelihood of large-scale destructive events

» Nassim Nicholas Taleb's Black Swan theory refers to a "large-impact, hard-to-predict, and rare event beyond the realm of normal expectations". Taleb recently offered Ten principles for a Black Swan-proof world.

4. Do not let someone making an "incentive" bonus manage a nuclear plant - or your financial risks. Odds are he would cut every corner on safety to show "profits" while claiming to be "conservative". Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.


 [ 04.16.09 ]




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