"In general, the big movers and shakers in financial markets act in quite economically rational ways" They are certainly more intelligent, knowledgeable and in

"In general, the big movers and shakers in financial markets act in quite economically rational ways" They are certainly more intelligent, knowledgeable and invest more rationally but I've seen nothing to make me believe that they lack or compensate for the types of positivity biases that makes everyone think they are above average and can beat their peers. We weren't talking about the contexts of the investment choices they make (where I mostly agree with you) but about changing to a system where the winners can't exploit the system to extract far more money than the value they put in. If they are A-type human beings they have a positivity bias if they have a human brain. You don't need perverse incentives to keep a system that over-rewards winners if everyone thinks they are, or soon will be, the winners. That said, I would also be interested in knowing about any perverse incentives here, I just don't think they are necessary.