The Logic of Life: Why your boss is overpaid

Tim Harford, author of "The Logic of Life", explains the brutal economics of tournament theory - and why it leads to office politics and overpaid bosses.

Category:

Education

Tags:

• timharford
• harford
• undercovereconomist
• lazear
• tournament
• overpaid
• boss
• bonus
• logicoflife
• economics

[MutantBamHammer]

Ladies and gentlemen, I give you: Tim Harford, destroyer of eggs!

[jonscott1]

great videos Tim

[gjdjdtht]

The eggs are too funny!!

[iliveonthisplanet]

this is really really well depicted - top notch :)



[bdg323]

This economic theory does not make sense. If it were the case that people destroyed other efforts in the same work environment, then the company itself would notice and fire those workers, since they would lose money from they destruction.

This is simple mathematical rationality. To optimize the worker's production, how would making them minimize each other's production help? This would minimize the company's production and profits! This simply does not make sense!

[rsolgtp]

I think what you have stumpled on is more like the psychology of tournament theory rather than the reality. what you fail to see is that it is set up in this way to maximise profits by whatever means necessary. The guy in the comfy chair is going nowhere and you never met him at your level. you will never get there no matter how good or backstabbing you are. your job is on the way to Asia anyway. keep running for the carrot.

[1980PintoMan]

My work place is the tournament of ass-kissers. Doing your job well doesn't count, in fact it only spurs more ass-kissing from the ass-kissers.

[AroundSun]

Thats greT and all but critiquing and offering solutions are quite different. What does he propose?

[ModerateNachos]

So what does this theory have to say for office environments where managers, trained in management, are paid more than the employees they manage who have very high skill sets that do not play into management. I'll give an example. Let's say a software designer at a corporation is paid X dollars. He, among other designers, is managed by a boss (with no skills outside of management) who is paid 5X. These people have no interest in management, ever. Still paid less even if they generate millions.

[malcolmbryant]

@TheScumbug Absolutely 100 per cent true from almost 40 years of experience.

[McInside]

down with the eggs!! lol

[vidfreak56]

A corporation pays themselves what they want at the top and delegate pay towards the bottom because they can. This is proven easily using modern examples. The banks are were too big to fail, got tarp money, and paid themselves huge salaries. Was this for a job well done? ROFL.