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Today's Pick: Behind the financial crisis
Why is this man still a loser?
Wall Street loves to dismiss public outrage over jaw-dropping compensation packages as populist class warfare. A new study from the Rotman School of Management, however, comes down on the side of the raging populists.
Researchers found that people asked to perform tasks involving cognitive skills — creativity, problem-solving or memory — performed better when offered modest financial incentives; when the incentives were made even higher, however, participants did worse.
Professor Nina Mazar explains, “If the payments are too high, they may backfire… there is a threshold.”
Not only does this research offer one reason Wall Street bankers and elite CEOs have been making spectacularly poor business decisions, it might also, at long last, explain why Alex Rodriguez is the most highly-paid man in baseball and still has no championship ring.
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Kathryn Fitzgerald @ MaRS
Kathryn provides market intelligence services to MaRS Advisory Services clients and to The Innovations Group at the University of Toronto. She is a graduate of the University of Toronto’s Faculty of Information.
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