The Stupid Math behind Contingent Repossession Assignments

math“People don’t always respond to incentives in the ways you might predict. What distinguishes good economic thinking from bad is recognition of the subtle, creative, and often unforeseen ways that people respond to incentives.” Economist Glen Whitman

 

GUEST EDITORIAL

Ask any economist, and he’s tell you that the business world works best where there are proper incentives in place to guarantee the best performance. And bad incentives produce what’s called “perverse consequences”. And there’s a secret perverse consequence to contingency assignments that’s being kept hidden.

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