Incentives and Relative Wealth Concerns

Autor:	Salvatore Miglietta
Rok vydání:	2014
Předmět:	Microeconomics Economics and Econometrics Incentive Relative wealth Compensation relative wealth concerns other-looking preferences incentives J31 G02 Strategy and Management Compensation (psychology) Economics Laboratory experiment Negative correlation Positive correlation Finance
Zdroj:	Quarterly Journal of Finance. :1450013
ISSN:	2010-1406 2010-1392
DOI:	10.1142/s201013921450013x
Popis:	If risk-averse agents prefer to be wealthier both in absolute terms and relative to their peers (relative wealth concerns), then (1) they prefer positive correlation, and (2) they are averse to negative correlation between their payoffs. A laboratory experiment shows that subjects prefer positively correlated payoffs. Subjects interested in relative payoffs display stronger aversion to negatively correlated payoffs. This novel evidence has implications that motivate firms' extensive use of broad-based incentive plans and firms' scarce use of Relative Performance Evaluation (RPE) contracts.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::08714db05e5fafd12682cb95867f04ee https://doi.org/10.1142/s201013921450013x Zobrazit plný text záznamu