Liar’s Poker — Lessons From The 80s Wall Street

I just finished reading Liar’s Poker by Michael Lewis. It’s a great book, well worth reading just for entertainment. But it also gives valuable insights into the behavior of both organizations and people.

Here’s a few of them:

• Investors (and people in general) would rather fail in groups than succeed as individuals. This creates huge opportunities for people who can afford to look foolish.
• Incentives are incredibly powerful, and will eventually determine the culture of any organization.
• Special treatment (e.g. higher salary) feels good in the short term, but is probably not worth the resentment of your peers. Always consider second order effects.
• People will knowingly and happily make decisions based on flawed data, as long as the source is ‘credible’, thus ensuring that they won’t be held accountable if it blows up in their faces.
• A lack of transparency in the compensation and promotion process creates politics. And if politics is required for succeeding within the organization, the organization will eventually be run by politicians.