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Author : Florian Englmaier
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (425 download)
Download or read book Optimal Incentive Contracts Under Inequity Aversion written by Florian Englmaier and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jenny Kragl
Publisher :
ISBN 13 :
Total Pages : 196 pages
Book Rating : 4.:/5 (68 download)
Download or read book The Impact of Inequity Aversion on Relational Incentive Contracts written by Jenny Kragl and published by . This book was released on 2009 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Pierre Chaigneau
Publisher :
ISBN 13 :
Total Pages : 35 pages
Book Rating : 4.:/5 (772 download)
Download or read book Aversion to the Variability of Pay and Optimal Incentive Contracts written by Pierre Chaigneau and published by . This book was released on 2010 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Pedro Rey-Biel
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Inequity Aversion and Team Incentives written by Pedro Rey-Biel and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study optimal contracts in a simple model where employees are averse to inequity, as modeled by Fehr and Schmidt (1999). A selfish employer can profitably exploit envy or guilt by offering contracts which create inequity off-equilibrium, i.e., when employees do not meet his demands. Such contracts resemble team and relative performance contracts. We derive conditions for inequity aversion to be in itself a reason to form work teams of distributionally concerned employees, even in situations in which effort is contractible.
Author : Robert Gibbons
Publisher :
ISBN 13 :
Total Pages : 70 pages
Book Rating : 4.3/5 ( download)
Download or read book Optimal Incentive Contracts in the Presence of Career Concerns written by Robert Gibbons and published by . This book was released on 1991 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies career concerns -- concerns about the effects of current performance on future compensation -- and describes how optimal incentive contracts are affected when career concerns are taken into account. Career concerns arise frequently: they occur whenever the market uses a worker's current output to update its belief about the worker's ability and competition then forces future wages (or wage contracts) to reflect these updated beliefs. Career concerns are stronger when a worker is further from retirement, because a longer prospective career increases the return to changing the market's belief. In the presence of career concerns, the optimal compensation contract optimizes total incentives -- the combination of the implicit incentives from career concerns and the explicit incentives from the compensation contract. Thus, the explicit incentives from the optimal compensation contract should be strongest when a worker is close to retirement. We find empirical support for this prediction in the relation between chief-executive compensation and stock-market performance.
Author : Florian Englmaier
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (66 download)
Download or read book Optimal Incentive Contracts Under Moral Hazard when the Agent is Free to Leave written by Florian Englmaier and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Bernard Sinclair-Desgagne
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (13 download)
Download or read book Incentive Contracts and Downside Risk Sharing written by Bernard Sinclair-Desgagne and published by . This book was released on 2017 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper seeks to characterize incentive compensation in a static principal-agent moral hazard setting in which both the principal and the agent are prudent (or downside risk averse). We show that optimal incentive pay should then be `approximately concave' in performance, the approximation being closer the more downside risk averse the principal is compared to the agent. Limiting the agent's liability would improve the approximation, but taxing the principal would make it coarser. The notion of an approximately concave function we introduce here to describe optimal contracts is relatively recent in mathematics; it is intuitive and translates into concrete empirical implications, notably for the composition of incentive pay packages. We also clarify which measure of prudence - among the various ones proposed in the literature - is relevant to investigate the tradeoff between downside risk sharing and incentives.
Author : George Baker
Publisher :
ISBN 13 :
Total Pages : 37 pages
Book Rating : 4.:/5 (129 download)
Download or read book Subjective performance measures in optimal incentive contracts written by George Baker and published by . This book was released on 1993 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Joseph L. Midler
Publisher :
ISBN 13 :
Total Pages : 356 pages
Book Rating : 4.F/5 ( download)
Download or read book Optimal Incentive Contracting written by Joseph L. Midler and published by . This book was released on 1970 with total page 356 pages. Available in PDF, EPUB and Kindle. Book excerpt: Several versions of the negotiation of the parameters of incentive contracts between a government and private contractors are formulated as game theoretical models. This framework permits one focus upon a number of aspects that have previously been overlooked such as the interaction of the participants, the lack of domination by one side or the other, constraints upon the player's strategies, and the possible joint interests of the one party in the other player's outcome. Computational methods of solution are suggested. (Author).
Author : Borys Grochulski
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Optimal Incentive Contracts with Job Destruction Risk written by Borys Grochulski and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the implications of job destruction risk for optimal incentives in a long-term contract with moral hazard. We extend the dynamic principal-agent model of Sannikov (2008) by adding an exogenous Poisson shock that makes the match between the firm and the agent permanently unproductive. In modeling job destruction as an exogenous Poisson shock, we follow the Diamond-Mortensen-Pissarides search-and-matching literature. The optimal contract shows how job destruction risk is shared between the rm and the agent. Arrival of the job-destruction shock is always bad news for the rm but can be good news for the agent. In particular, under weak conditions, the optimal contract has exactly two regions. If the agent's continuation value is below a threshold, the agent's continuation value experiences a negative jump upon arrival of the job-destruction shock. If the agent's value is above this threshold, however, the jump in the agent's continuation value is positive, i.e., the agent gets rewarded when the match becomes unproductive. This pattern of adjustment of the agent's value at job destruction allows the firm to reduce the costs of effort incentives while the match is productive. In particular, it allows the firm to adjust the drift of the agent's continuation value process so as to decrease the risk of reaching either of the two inefficient agent retirement points. Further, we study the sensitivity of the optimal contract to the arrival rate of job destruction.
Author : Anna Dodonova
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)
Download or read book Optimal Incentive Contracts for Loss-Averse Managers written by Anna Dodonova and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an explanation for the widespread use of stock option grants in executive compensations. It shows that the optimal incentive contract for loss-averse managers must contain a substantial portion of stock options even when it should consist exclusively of stock grants for quot;classicalquot; risk-averse managers. The paper also provides an explanation for the drastic increase in the risk-adjusted level of CEO compensations over the past two decades and argues that more option-based compensation should be used in firms with higher cash flow volatility and in industries with higher degree of heterogeneity among firms.
Author : Albertus Johannes Dur
Publisher :
ISBN 13 :
Total Pages : 29 pages
Book Rating : 4.:/5 (249 download)
Download or read book Optimal Incentive Contracts when Workers Envy Their Boss written by Albertus Johannes Dur and published by . This book was released on 2004 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Archawa Paweenawat
Publisher :
ISBN 13 :
Total Pages : 108 pages
Book Rating : 4.:/5 (423 download)
Download or read book Optimal Incentive Contracts with Hidden Savings written by Archawa Paweenawat and published by . This book was released on 2009 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : George P. Baker
Publisher :
ISBN 13 :
Total Pages : 39 pages
Book Rating : 4.:/5 (129 download)
Download or read book Subjective Performance Measures in Optimal Incentive Contracts written by George P. Baker and published by . This book was released on 2010 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Objective measures of performance are seldom perfect. In response, incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined use of subjective and objective performance measures in (respectively) implicit and explicit incentive contracts. Naturally, objective and subjective measures often are substitutes, sometimes strikingly so: we show that if objective measures are sufficiently close to perfect then no implicit contracts are feasible (because the firm's fallback position after reneging on an implicit contact is too attractive). We also show, however, that objective and subjective measures can reinforce each other: if objective measures become more accurate then in some circumstances the optimal contract puts more weight on subjective measures (because the improved objective measures increase the value of the ongoing relationship, and so reduce the firm's incentive to renege). We also analyze the use of subjective weights on objective performance measures, and provide case-study evidence consistent with our analyses.
Author : Björn Bartling
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Relative Performance Or Team Evaluation? Optimal Contracts for Other-Regarding Agents written by Björn Bartling and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper derives optimal incentive contracts for agents with other-regarding preferences. It offers a behavioral explanation for the empirically observed lack of relative performance evaluation. We analyze a principal-multi agent model and assume that agents are inequity averse or status seeking. We show that team contracts can be optimal even if the agents' performance measures are positively correlated such that relative performance evaluation would be optimal with purely self-interested agents and even though relative performance evaluation provides additional incentives to provide effort if agents have other-regarding preferences. Furthermore, optimal incentive contracts for other-regarding agents can be low-powered as compared to contracts for purely self-interested agents.
Author : George Pierce Baker
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (339 download)
Download or read book Subjective Performance Measures in Optimal Incentive Contracts written by George Pierce Baker and published by . This book was released on 1994 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined used of subjective and objective performance measures in implicit and explicit incentive contracts. It shows that the presence of sufficiently effective explicit contracts can render all implicit contracts infeasible, even those that would otherwise yield the first-best. It also shows, however, that in some circumstances objective and subjective measures are complements: neither an explicit nor an implicit contract alone yields positive profit, but an appropriate combination of the two does. Finally, subjective weights on objective measures are considered.
Author : Joel S. Demski
Publisher :
ISBN 13 :
Total Pages : 58 pages
Book Rating : 4.:/5 (248 download)
Download or read book Optimal Incentive Contracts with Multiple Agents written by Joel S. Demski and published by . This book was released on 1983 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt:
