The financial officer at Stocks R Us demands that his brokers take risk in their stock suggestions. Recently, he had to reduce the portfolio of a broker who missed the mark on a stock (the stock went down). "I must punish undesirable behaviors," he thought to himself. What will the financial officer's actions do?

Question

Quizplus · Accepted Answer

The financial officer's actions of reducing the portfolio of a broker who missed the mark on a stock and thinking to himself that he must punish undesirable behaviors can reinforce undesirable behaviors in his brokers. The brokers may become more reckless and take even riskier stock suggestions to avoid punishment, rather than making informed and calculated decisions.

The Financial Officer at Stocks R Us Demands That His