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.

MoreLess

Year of publication:	2007
Authors:	Guigou, Jean-Daniel ; Lovat, Bruno ; Piaser, Gwenaël
Institutions:	Luxembourg School of Finance, Faculté de droit, d'économie et de finance
Subject:	Executive Compensation \| Relative Performance Evaluation \| Moral Hazard \| Market Structure

More details

Extent:	application/pdf
Series:	LSF Research Working Paper Series.
Type of publication:	Book / Working Paper
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/10005590044