Compensation contracts have been criticized for encouraging managers to manipulate information. This includes bonus schemes that encourage earnings smoothing, and option packages that allow managers to cash out early when the firm is overvalued. We show that the intransparency induced by these...

This note uses stochastic dominance to help decision makers who are expected utility maximizers choose between risky investments with minimal knowledge of the decision maker's utility function. More specifically, we employ second-order stochastic dominance. It is argued that for two risky...