Scientific Definition
Insulation from risk changes the risks people take.
Plain-English Definition
Insulation from risk changes the risks people take.
Feynman Explanation
Bail out the gambler and the next bet gets bigger.
Core Principle
Insulation from risk changes the risks people take.
Mechanisms
Pending editorial review.
Insulation from risk changes the risks people take.
Pending editorial review.
Pending editorial review.
Internal P&Ls where downside is socialized and upside is private.
Pending editorial review.
Pending editorial review.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
Bail out the gambler and the next bet gets bigger.
Examples
- TBTF banks taking risks they wouldn't if losses were personal.
- Internal P&Ls where downside is socialized and upside is private.
Pending editorial review.
Famous Experiments
Pending editorial review.
Design Principles
- Re-couple risk with reward. Skin in the game at the decision level.
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.
- Re-couple risk with reward. Skin in the game at the decision level.
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.
Once-a-year feedback rewards once-a-year behavior.
The more a quantitative indicator drives decisions, the more it distorts the process it measures.
Donors penalize 'overhead'; charities under-invest in capacity.
Donors penalize 'overhead' and starve capacity that produces outcomes.
A reward designed to reduce X produces more X.
Squeezing all slack from a system optimizes throughput but eliminates resilience.
'Equal value' exchanges incentivize subjective appraisal gaming to trade low-utility land for high-value public assets.
When a measure becomes a target, it ceases to be a good measure.
Deep specialization improves local output but breaks cross-domain understanding.
Greedy improvement loops climb hills that aren't the highest hill.
When rewards don't match stated values, culture quietly decays toward what is rewarded.
Systems with weak corrective feedback drift unchecked into failure modes.