Assymetrical benefit/risk structure incentivises big risks
An assymetical benefit/risk structure distorts the risk tolerance of individual traders: with huge bonuses on offer for success versus (perhaps) losing your job if the bets fail.
Immediately related elementsHow this works
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The Global Financial Crisis »The Global Financial Crisis
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Immediate triggers of the financial crisis? »Immediate triggers of the financial crisis?
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Pathology in the Credit Default Swaps market »Pathology in the Credit Default Swaps market
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Vast scale of rewards encouraged complicity with system »Vast scale of rewards encouraged complicity with system
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Assymetrical benefit/risk structure incentivises big risks
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