What Are the Risk-Taking Properties of Incentive Plans Based on Relative Performance?

2020 ◽  
Author(s):  
Oscar Timmermans
Keyword(s):  
Risk Taking ◽  
Relative Performance ◽  
Incentive Plans

Incentives and Relative Wealth Concerns

2014 ◽  
Vol 04 (04) ◽  
pp. 1450013 ◽  
Author(s):  
Salvatore Miglietta
Keyword(s):  
Performance Evaluation ◽  
Laboratory Experiment ◽  
Negative Correlation ◽  
Relative Performance ◽  
Risk Averse ◽  
Relative Performance Evaluation ◽  
Positive Correlation ◽  
Relative Wealth ◽  
Incentive Plans

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.

scholarly journals On relative performance, remuneration and risk taking of asset managers

2018 ◽  
Vol 14 (4) ◽  
pp. 517-545 ◽  
Author(s):  
Emilio Barucci ◽  
Gaetano La Bua ◽  
Daniele Marazzina
Keyword(s):  
Risk Taking ◽  
Relative Performance ◽  
Asset Managers

Boys With Epilepsy Are More Susceptible to Risk Taking

2010 ◽  
Vol 44 (10) ◽  
pp. 32
Author(s):  
PATRICE WENDLING
Keyword(s):  
Risk Taking
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