A benchmark is to price what a credit rating agency is to quality – Jayanth Varma

Andrew Verstein has an interesting paper on the Law and Economics of Benchmark Manipulation. One of the gems in that paper is the title of this blog post: “A benchmark is to price what a credit rating agency is to quality.” Verstein is saying that just as credit rating agencies became destructive when their ratings were hardwired into various legal requirements, benchmarks also become dangerous when they are hardwired into various legal documents.

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