Incentives in Managerial Compensation: A Survey of Experimental Research. (Draft Paper).

The issue of designing effective managerial incentives has recently gained considerable attention in both theoretical analysis and business practices. Despite the importance of the theoretical achievements, to date little attempt has been made to test the major theoretical hypotheses empirically. More recently, the debate has been fuelled by the development of economic experimental studies explicitly designed to shed light on how real decision makers behave in such settings. The aim of this paper is to provide a comprehensive survey of experimental contributions to mechanism and incentive design issues and to offer some suggestions for future research.