That is a perfectly reasonable point of view for yourself and I totally get it.
But I would take a job with a 50% chance of making 200k and a 50% chance of making 100k over a job with a 100% chance of making 125k even if the outcome was determined by a coin flip. +EV is +EV whether I am responsible for the impact or not.
It makes sense when you put it that way. I guess the issue is not so much risk tolerance as cynicism. It is a negotiation where the information asymmetry does not favor me. The potential employer must be offering a variable compensation package with a claimed EV of $X because they believe their actual cost will be less than $X. Otherwise, why make it complicated? They'd just offer $X. I conclude that the only actual knowledge I have about the value of the offer is that it won't be lower than the base salary. I therefore accept the offer if the base salary is high enough to make the job worthwhile, and reject it otherwise. Any additional money which might happen to come along later I treat as a windfall; it has no incentive effect.
That seems a little extreme. The reason they do bonuses is because in a bad year they can pay you 0.5x and in a good year 1.5x. You still get an average of x per year, but in such a way that they don't go out of business. Finance companies tend to see much larger revenue swings than other industries.
My current employer gets over this hurdle by guaranteeing your bonus for 1-2 years, thus giving them time to build trust before the variable compensation gets going.
Otherwise, why make it complicated? They'd just offer $X.
The reason that this is done is because investment banks tend to have larger revenue swings than many other businesses. Due to this, they want to be able to more easily adjust their costs (of which people are a huge %) relatively easily. It's much easier to adjust bonuses up and down than base salaries.
Yes, if it really was a coin flip you'd be right. But that's not really reasonable - in the real world you can't know the odds like that.
If you think about what the company is saying, it's "If we fail at our business this year, we'll pay you less despite all your work." Even if that was only a 10% chance, meaning I'd statistically win, I wouldn't work there because they're looking to shit on me for their fuckups.
And it's far more likely that they'll specifically and intentionally defraud you by faking the performance metric, and reward themselves the bonus they "saved" by not paying you.
> And it's far more likely that they'll specifically and intentionally defraud you by faking the performance metric, and reward themselves the bonus they "saved" by not paying you.
Surely this would result in extremely high turnover? High turnover employers is probably something you want to avoid anyway, so I don't see this changing the equation much.
Your cynicism does not match up with the historical behavior of investment banks towards their employees. But yes, if you think this way you should definitely not ever go work for one.
In fact you probably shouldn't work with anyone else because whenever you do that your success is, at least in some ways, tied in with their success. Best to work alone all by yourself where you don't ever have to trust anyone else.
But I would take a job with a 50% chance of making 200k and a 50% chance of making 100k over a job with a 100% chance of making 125k even if the outcome was determined by a coin flip. +EV is +EV whether I am responsible for the impact or not.