SiliconBeat

The New York Times’ Floyd Norris weighs in with a story today about how stock options affect executives’ behavior. In theory, stock options are designed to make executives take bigger risks. Bigger risks=bigger rewards. Right?

Not so fast. According to Norris’ story, it’s only part right. Yes, executives do take bigger risks. Unfortunately, they’re often bad ones. The authors of a report cited by Norris argue that with options, there’s no downside for these executives since they wouldn’t lose any real money if things go haywire. That makes them much more willing to roll the dice with other people’s money.