The kerfuffle over the AIG bonuses seems to subsiding. But here is a thought-provoking item from yesterday's edition of The New York Times (HT to Greg Mankiw). If you spent any time discussing the ins and outs of the AIG situation, this might make an interesting follow-up. And if you're looking for a question, a good place to start might be "How did the institutions (rules) affect choices of this individual and others in Congress, and others at AIG?" The second could be how might changing the institutions positively/negatively affect future choices of this individual and others affected by the AIG collapse?
I look forward to your thoughts.
This post relates to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
5. Incentives produce “predictable” responses.
7. Economic thinking is marginal thinking.