Dan Ariely on Wall Street fraud and the psychology of a cheater
Welcome to Capital Account. Over the past five years, more than two-dozen companies neglected to tell investors they were preparing for Chapter 11 bankruptcy, according to a Wall Street Journal analysis. Companies including Kodak and American Airlines did not warn investors about bankruptcy preparations, even though such information could be deemed 'material' to investors. We talk to Dan Ariely, professor of behavioral economics, about the best way to incentivize morality and deter corporate cheating.
Plus, JPMorgan Chase reached a preliminary agreement with SEC regulators to settle claims related to mortgage-backed bonds handled by JP Morgan and Bear Stearns. How well do lawsuits deter financial crimes? We talk to Dan Ariely about what actually curbs Wall Street wrongdoing.