Relative Performance Evaluation, Risk Aversion and Entry.

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, we introduce entry issues in our model. We then show that forbidding RPE can favour competition.

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Year of publication:	2007
Authors:	Guigou, Jean-Daniel ; Lovat, Bruno ; Piase, Gwenaël
Institutions:	Bureau d'Économie Théorique et Appliquée (BETA), Université de Strasbourg
Subject:	Executive Compensation \| Relative Performance Evaluation \| Moral Hazard \| Market Structure

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Extent:	application/pdf
Series:	Working Papers of BETA.
Type of publication:	Book / Working Paper
Language:	English
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; D82 - Asymmetric and Private Information ; D86 - Economics of Contract: Theory
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005422836