Employee stock options differ substantially from traded options. Most expire within 90 days of the termination of employment, and are forfeited if the employee leaves before vesting. The major accounting standards boards are in agreement that options should be expensed, but companies have...

Using a dynamic model with uncertainty and asymmetric information, we study the impact of debt and bankruptcy on managerial compensation and learning. In this model, compensation has two roles to play - providing incentives to the manager and learning about his type. We show that debt, through...

Stock option grants to top managers have largely contributed to the dramatic increase in US executive pay in recent years. In this paper it is argued that stock options, compared to other forms of compensation, have created strong incentives for managers to engage in lobbying activities for...

A common view is that there is little correlation between firm performance and CEO pay. Using a new 15-year panel data set of CEOs in the largest publicly traded U.S. companies, we document a strong relationship between firm performance and CEO compensation. This relationship is generated almost...

We compare the economic approach to research on personnel and organizational design to approaches from behavioral disciplines. Instead of a survey of the field, our emphasis is on topics which are important in organizational research outside of economics, yet have been little emphasized by...

We investigate the causal effect of conversations about performance and performance pay implementing a 2x2 field experiment in a retail chain. In the performance pay treatments, managers receive a bonus for profit increases. In the performance review treatments, managers have regular meetings...

Online labour platforms matching labour supply and demand are profoundly modifying the world of work. Businesses use them to outsource tasks to a world-wide pool of workers; while workers can access work opportunities transcending national boundaries. Increasingly, workers are located in...

In a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3%. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2%...

I discuss some key issues raised by behavioral economics for better understanding the working of the labor market. Amongst the key points in this paper are: (i) a revised modeling of the labor supply curve, with a specific focus on the target income approach (ii) elaborating on the importance of...

We test the effectiveness of team incentives by running a natural field experiment in a retail chain of 193 shops and 1,300 employees. As a response to intensified product market competition, the firm offered a bonus to shop teams for surpassing sales targets. A bonus to teams rather than...