Scientific Definition
Government rescues of failing institutions privatize gains and socialize losses.
Plain-English Definition
Government rescues of failing institutions privatize gains and socialize losses.
Feynman Explanation
Heads I win. Tails you bail me out.
Core Principle
Government rescues of failing institutions privatize gains and socialize losses.
Mechanisms
Pending editorial review.
Government rescues of failing institutions privatize gains and socialize losses.
Pending editorial review.
Pending editorial review.
Bailout precedent reshapes future risk appetite.
Pending editorial review.
Pending editorial review.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
Heads I win. Tails you bail me out.
Examples
- 2008 too-big-to-fail rescues; later airline COVID aid.
- Bailout precedent reshapes future risk appetite.
Pending editorial review.
Famous Experiments
Pending editorial review.
Design Principles
- Pre-committed resolution authority. Risk-priced insurance funds.
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.
- Pre-committed resolution authority. Risk-priced insurance funds.
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.
Annual bonuses reward annual results — risk that blows up in year four with damage in year seven is rational.
Auditors paid by the firms they audit have predictable blind spots.
Quarterly bonuses create end-of-quarter behavior changes.
Issuers pay raters who compete for the highest ratings.
Quarterly earnings drive quarterly behavior.
Percentage-of-AUM fees reward gathering assets regardless of net performance.
Originators paid on volume, not on default rates.
Originators paid on volume, not on default rates, fueled the subprime collapse.
EPS-targeted comp incentivizes buybacks even when reinvestment yields more.
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.