Marketing Malpractice: The Incentive Bubble

The skills of managers and investors are among the most precious capabilities in our market economy.  Accordingly, they should be richly rewarded.  But the fact is that they are extremely rare, and assessing them is not easy. That has led to a seemingly simple solution:  using financial markets to measure performance and structure compensation.  But that solution has spawned a complex problem:  Stock instruments for managers, and high-powered incentive contracts for investors, have dramatically changed the nature and level of incentives and reward.....
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