We model career concerns in a regime where a linear incentive contract includes a mix of a publicly observed performance measure and a second, correlated, private measure that is not observed by the labor market. Under this quot;mixquot; regime, we find that agent effort and total agency payoff...

This paper investigates firm characteristics associated with the choice of individual versus group compensation schemes for senior executives below the CEO level. We define individual compensation schemes where senior executives are compensated independently from other senior executives, where...

We study contracting in a principal multi-agent moral hazard problem where agents receive private information on the realisation of a common productivity shock after contracts are signed, but before actions are taken. Joint performance evaluation schemes can be optimal when private information...

This paper uses a hand-collected dataset of venture capital partnership agreements to study venture capitalists' compensation. Several new findings emerge. First, VC compensation consists of three elements, not two (management fee and carried interest), as commonly believed. The third element is...

This paper reconciles three pronounced trends in U.S. corporate governance: the increase in pay levels for top executives, the increasing prevalence of appointing CEOs through external hiring rather than internal promotions, and the increased prevalence of hiring outside CEOs with prior...

In this paper we provide experimental evidence indicating that incentive contracts may undermine voluntary cooperation. This suggests that explicit incentives may have costly side effects that have been largely neglected by economists. In our experiments the undermining effect is so strong that...

Two alternative relative compensation schemes are compared with respect to total output that can be generated at a given sum of salaries. While the promotion regime guarantees that any salary increase is permanent, the premium system allows a reduction in the income of an agent to the base...

We evaluate the impact of product market uncertainty on workers wages, addressing the questions: To what extent do firms provide insurance to their workforce, insulating their wages from shocks in product markets? How does the amount of insurance provided vary with firm and worker attributes? We...

This paper extends the literature on CEO compensation by developing and testing a principal-agent model of executive compensation in the context of project selection. The model's focus on executive project selection decisions highlights the multi-dimensional nature of executive choices that...

We study management turnover for the top five executives in a sample of 443 large firms from 1993 through 1998. The rate of forced turnover for non-CEOs is at least as great as that for CEOs, but the sensitivity of turnover to firm performance is smaller for non-CEOs. The probability that a...