Under deflation due to a “fallacy of composition,” raising prices and wages by only one firm will be a disadvantage. As many firms raising prices and wages simultaneously will have a positive effect on the economy as a whole, the policy authorities have to come up with bold policy measures that enable firms to change their mindset in such a manner.
BIS Review 100/2008  3  New rules on bank governance came into effect recently; one of their provisions requires that the criteria for the remuneration of bank managers be designed so as to avoid perverse incentives in the matter of risk taking and risk management.