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Moral hazard and risk-sharing: risk-taking as an incentive tool

Belhaj, Mohamed; Bourlès, Renaud; Deroïan, Frédéric - HAL - 2010

We examine how moral hazard impacts risk-sharing when risk-taking can be part of the mechanism design. In a two-agent model with binary effort, we show that moral hazard always increases risk-taking (that is the amount of wealth invested in a risky project) whereas the effect on risk-sharing...

Persistent link: https://www.econbiz.de/10008794403

Incentives to Learn Calibration : a Gender-Dependent Impact

Dargnies, Marie-Pierre; Hollard, Guillaume - HAL - 2008

. In a typical miscalibration experiment, subjects are asked to provide subjective confidence intervals. A very robust …

Persistent link: https://www.econbiz.de/10010738661

Strategic Beliefs

Jouini, Elyès; Napp, Clotilde - HAL - 2007

. overconfidence) as well as pessimism (resp. doubt) both emerge as optimal beliefs. Furthermore, we obtain a positive correlation …

Persistent link: https://www.econbiz.de/10008794057

Redesigning Teams and Incentives:A Real Effort Experiment with Managers of a Merged Company

Montmarquette, Claude; Rullière, Jean-Louis; Villeval, … - HAL - 2002

managers originating from different incentives and working habits. In this paper, we offer a new way to investigate in post … managers within a large pharmaceutical company show that not only changes in compensation incentives affect performance but … also that both managers' past compensation schemes and company cultures matter for cooperation. The efficiency of a new …

Persistent link: https://www.econbiz.de/10008788808

Reining in Excessive Risk Taking by Executives : Experimental Evidence

Lefebvre, Mathieu; Vieider, Ferdinand - HAL - 2010

Compensation of executives by means of equity has long been seen as a means to tie executives' income to company performance, and thus as a solution to the principal-agent dilemma created by the separation of ownership and management in publicly owned companies. The overwhelming part of such...

Persistent link: https://www.econbiz.de/10008790773

Self-selection and the Efficiency of Tournaments

Eriksson, Tor; Teyssier, Sabrina; Villeval, Marie Claire - HAL - 2009

The literature has shown that the overall efficiency of exogenously imposed tournaments is reduced by a high variance in performance. This paper reports results from an experiment analyzing whether allowing subjects to self-select into different payment schemes is reducing the variability of...

Persistent link: https://www.econbiz.de/10009401083

Optimal Group Incentives with Social Preferences and Self-Selection

Teyssier, Sabrina - HAL - 2007

In this paper, we analyze group incentives when a proportion of agents feel in- equity aversion as defined by Fehr and Schmidt (1999). We define a separating equilibrium that explains the co-existence of multiple payment schemes in firms. We show that a tournament provides strong incentives to...

Persistent link: https://www.econbiz.de/10008788937

Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts

Teyssier, Sabrina - HAL - 2008

This paper reports on the results of an experiment testing whether the agents selfselect between a competitive payment scheme and a revenue-sharing scheme depending on their inequity aversion. Average efficiency should be increased when these payment schemes are endogenously chosen by agents. We...

Persistent link: https://www.econbiz.de/10008788967

Other-Regarding Preferences and Performance Pay – An Experiment on Incentives and Sorting

Eriksson, Tor; Villeval, Marie-Claire - HAL - 2004

Variable pay not only creates a link between pay and performance but may also help firms in attracting the more productive employees (Lazear 1986, 2000). However, due to lack of natural data, empirical analyses of the relative importance of the selection and incentive effects of pay schemes are...

Persistent link: https://www.econbiz.de/10008788998

Self-Selection and the Efficiency of Tournaments

Eriksson, Tor; Teyssier, Sabrina; Villeval, Marie-Claire - HAL - 2006

When exogenously imposed, rank-order tournaments have incentive properties but their overall efficiency is reduced by a high variance in performance (Bull, Schotter, and Weigelt 1987). However, since the efficiency of performance-related pay is attributable both to its incentive effect and to...

Persistent link: https://www.econbiz.de/10008790614

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