One technique employed by budget-conscious researchers is to pay only some subjects for their choices in an experiment, or pay smaller stakes to all subjects. We test the effect of paying some subjects versus paying all subjects in the context of risk preferences, controlling for the difference...

Most large-scale economic experiments use a between-subjects random incentive system-BRIS-which selects a subset of the participants at random and offers real payment only to the selected participants. We evaluate the relative impact of nominal payoffs and the selection probability on the...

Compensation schemes have been blamed for encouraging excess risk-taking on the part of managers within the financial system and real economy. In general, compensation cannot decrease below the base salary, while gains from bonuses can be limitless. The potential link between compensation and...

We study risk taking on behalf of others in an experiment on a large random sample. The decision makers in our experiment are facing high-powered incentives to increase the risk on behalf of others through hedged compensation contracts or with tournament incentives. Compared to a baseline...

This paper uses a novel empirical setting to explore the association between a firm's operational risk, managerial monitoring costs, and how managers are compensated. We investigate a sample of supplier firms that rely on a few large customers for the bulk of their revenues. We predict that...

Measuring risk preferences in the field is critical for policy, however, it can be costly. For instance, the commonly used measure of Holt and Laury (2002) relies on a dozen lottery choices and payments which makes it time-consuming and costly. We propose a short version of the Holt and Laury...

We analyze a sample of 2,914 hiring contracts and show how job security plays a role in pay negotiation. We find a significant impact of job security on CEO pay using both firm and industry-level measures across US firms. In general, CEO candidates and the board members would trade pay for job...

This paper uses variation in real estate prices to test whether CEOs are paid for luck or to respond to luck. We distinguish between pay for luck and pay for responding to luck by exploiting GAAP accounting rules. In the United States, real estate used in the firm's operations is not...

This paper estimates the risk premium in CEO incentive compensation. Using detailed U.S. CEO contract compensation data and simulation analysis, we find that CEOs with riskier pay packages are paid more. The estimated risk premium from total incentive pay represents 15% of total pay. We further...