Guigou, Jean-Daniel; Lovat, Bruno; Piaser, Gwenaël - Luxembourg School of Finance, Faculté de droit, … - 2007
We study the relations between compensation schemes and risk aversion of managers in a strategic framework. We first show that the use of relative performance evaluation (RPE) in compensation contracts reduces the equilibrium profits of Cournot firms if managers are not too risk averse. Second,...