Thursday 18 January 2018

Thomas Molloy: Managers and unions have an equal stake in saving ESB pension

THE study of perverse incentives is one of the most interesting fields in modern economic theory and in business life.

If you get incentives right, you can make almost anybody do anything but getting incentives wrong leads to all sorts of unintended consequences.

A famous example of unintended consequences dates back to 19th Century Hanoi when the French colonial rulers started paying people a bounty for each rat tail handed in to the authorities. The French wanted to exterminate rats but the law of unintended consequences ensured that the locals started breeding rats instead.

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