Scientific Definition
Pay tied to stock price encourages short-term price management.
Plain-English Definition
Pay tied to stock price encourages short-term price management.
Feynman Explanation
We aligned interests. Just not the right ones.
Core Principle
Pay tied to stock price encourages short-term price management.
Mechanisms
Pending editorial review.
Pay tied to stock price encourages short-term price management.
Pending editorial review.
Pending editorial review.
Comp structure shapes capital allocation more than strategy does.
Pending editorial review.
Pending editorial review.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
We aligned interests. Just not the right ones.
Examples
- Buybacks, EPS engineering, and aggressive guidance.
- Comp structure shapes capital allocation more than strategy does.
Pending editorial review.
Famous Experiments
Pending editorial review.
Design Principles
- Multi-metric, multi-year, structurally diversified executive comp.
Measurement Approaches
Pending editorial review.
Evidence
Pending editorial review.
Pending editorial review.
The Perverse Incentive Lens™
How this behavior is exploited — and how to redesign around it.
- Multi-metric, multi-year, structurally diversified executive comp.
Pending editorial review.
Pending editorial review.
Interactive Mini Network
Click any neighbor to re-center the graph and follow the threads of connection.
Knowledge Graph Neighbors
Auto-linked to the rest of the Human Behavior Taxonomy by family, domain, dimension, and shared keywords.
Earn-outs designed to retain founders often demotivate the team they bought.
Funnels rewarded for new logos under-invest in retention and lifetime value.
Cuts that lift margin this quarter erode product quality and brand equity over years.
Narrowly tied bonuses get gamed; people optimize the metric, not the underlying goal.
Re-hires often get raises larger than internal promotions.
CEO pay tied to size rewards deal-making even when acquisitions destroy value.
Sales forecasts under-set to ensure attainment bonus.
Capital tied to growth rates funds unsustainable scaling and unit-economics denial.
Managers measured by team size grow teams beyond need.
Awards reward visible novelty; quiet excellence goes unrecognized.
Innovation programs designed to signal innovation, not to produce it.
Managers hoard talent; cross-team mobility dies.