Why are we capping executive salaries? Because they encourage poor performance.
“If our tests mimic the real world, then massive bonuses clearly don’t work. They may not only cost employers more but also discourage executives from working to the best of their abilities. The financial crisis, perhaps, didn’t happen in spite of the bonuses, but because of them.”
Now, I’m a fan of politics and I enjoy a good rationalization as much as the next guy and I really enjoyed Ariely’s Predictably Irrational, but this is obviously pseudo-science trying to justify politics.
Thoughts?