Ep28 Incentives and Externalities

All Else Equal: Making Better Decisions

Humans respond to incentives, and so incentives predict behavior and sometimes the behavior can be detrimental. In this episode of All Else Equal: Making Better Decisions, hosts and finance professors Jonathan Berk and Jules van Binsbergen discuss a range of less obvious examples of how incentives produce negative externalities — long legal contracts, negative news stories, dumb traffic lights, overly pessimistic disaster prediction and other examples.

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All Else Equal: Making Better Decisions Podcast is a production of Stanford Graduate School of Business and is produced by University FM.

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