The Wrong Incentive: Executives Taking Stock Will Behave Like Athletes Placing Bets

In football, there is a rigid separation of the real market — the games played on Sundays — from the expectations market, or the betting that takes place prior to the game. No participant in the real market is permitted to participate in any way in the expectations market. If they do, they risk a lifetime ban for even one infraction. There is an even bigger game in which players in the real market not only are allowed, but are strongly encouraged to play in the related expectations market — even though exactly the same incentive problems exist. That game consists of the markets in which publicly traded corporations compete.

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