Tuesday, September 22, 2015

Cost Of Doing Business

Probably a gamble they lost, but as long as the expected value of a corrupt act exceeds the expected value of the punishment, this stuff will continue. It's actually worse than that, as individuals reap, to some extent, the rewards of the corruption, but are unlikely to actually receive any of the punishment. Firm/individual incentives are not exactly aligned. Frankly, I don't even think you need to prosecute all that many people to make this kind of behavior a bit less attractive, but we don't even do that.
Volkswagen set aside 6.5 billion euros ($7.3 billion) to pay costs related to its evolving emissions-cheating scandal in the U.S.
Some 11 million vehicles worldwide are affected by the irregular software, VW said in a statement today.