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FQwentuhan about Perverse Incentives

Today’s FQwentuhan talks about what I mentioned in my article date August 21, 2017. Remember the Hanoi Rat Massacre? If you missed that, here’s the link Ilang Kian pa ba bago tayo matauhan?

We use incentives to help us achieve a goal. Unfortunately, sometimes incentives produce undesirable results, moving us farther from our goal. Perverse incentive is also referred to as the Rat Effect or Cobra Effect. In investing parlance, Charlie Munger, the partner of Warren Buffett in Berkshire Hathaway, calls it Incentive-Caused Bias. To help me discuss this topic, we have US-educated economist Dr. Oggie Arcenas from the UP School of Economics.

Watch this. You may be able to apply the lessons in the different aspects of your life. wallet-icon