Beware the dysfunctional consequences of misguided incentive systems
(World News UK)

Following the disclosure of salaries at the BBC, it has hardly seemed possible to open a newspaper or switch on the television without being bombarded by stories about pay. By pure coincidence, an academic paper entitled “Pay for Performance and Beyond” has just appeared. So what, you might ask? Except that it is one of the 2016 Nobel Prize lectures, by Bengt Holmstrom, a professor at MIT. Holmstrom’s work began in the 1970s on the so-called principal-agent problem. This is of great...