Lessons Learned

• An employee spending her company’s money has an incentive to spend the money in a way that benefits her, not her company.

• Bribing those who spend other people’s money can be a cheap means to make sales.

• Companies need to employ appropriate safeguards to ensure that employees don’t misallocate company funds. Many types of bribery are legal, so you can’t rely upon fear of criminal prosecution to stop your employees from taking noncash bribes.

• Insurance creates incentives for people to take too many risks and spend too much money.

• To combat the negative incentive that insurance creates, insurance providers need to monitor, regulate, and carefully screen their customers.

• The people who most desire insurance are those to whom the insurance company would least like to sell.