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During their executive retreats they decided to be risk seeking instead. I wonder if the problem at the recently troubled companies (AIG, Merrill, Lehman etc)

During their executive retreats they decided to be risk seeking instead. I wonder if the problem at the recently troubled companies (AIG, Merrill, Lehman etc) was not enough checks in place or not enough power allotted to the employees who knew something was wrong.

mixmax 18y ago
Same as always: greed
- eru 18y ago
  Ideally a system should use greed (and other emotions) instead of having to guard against it.
andr 18y ago
From memory: the Excel bug that caused Moody's to give high ratings of mortgage securities (one of the probable causes of the whole mess) was known, but management decided not to fix it. So, greed can override checks and balances.
- nradov 18y ago
  The bug wasn't in Excel. It was Moody's own fault, not Microsoft's.
  - LukeG 18y ago
    No, their version had a bugger where zero in the denominator came back as "infinity."
  - andr 18y ago
    Sorry, I didn't express myself clearly. I meant a bug in an Excel spreadsheet made by Moody's.
- Dilpil 18y ago
  The issue was not a bug, it was a fundamental misunderstanding of how real estate markets work. Moody's had a model for pricing mortgages which assumed real estate prices never went down. It was basically the real life equivalent of the famous "Assume a spherical cow..." problem.