Agency theory suggests that high pay-performance sensitivity (PPS) of CEO's compensation is an important motivation mechanism to the CEO to improve corporate performance. We develop a simple model that suggests that reverse causality should also be considered. Specifically, our model predicts...

The debate on employee representation on corporate boards has received considerable attention from scholars and politicians around the world. We provide new insights to this ongoing discussion by applying power indices from game theory to examine the actual voting power of employees on boards...

Recent revisionist accounts of corporate governance in both business history and finance are challenging the tradition narrative, associated with Berle and Means (1932) and Chandler (1977), in which the American model of diffuse ownership and coherent diversification is both an inevitable...

We investigate how burden sharing rules impact the voluntary provision of a public good which generates heterogeneous benefits to agents. We compare different rule-based contribution schemes where agents can first suggest a minimum provision level of the public good, before the smallest common...

We explore the extent to which altruism, as measured by giving in a dictator game (DG), accounts for play in a noisy version of the repeated prisoner's dilemma. We find that DG giving is correlated with cooperation in the repeated game when no cooperative equilibria exist, but not when...

Using a common pool resource game protocol with voting we examine experimentally how cooperation varies with the level at which (binding) votes are aggregated. Our results are broadly in line with theoretical predictions. When players can vote on the behavior of the whole group or when leaders...

Studies have shown that there are differences in cooperative behavior across countries. Furthermore, differences in the use and the reaction on the introduction of a norm enforcement mechanism have been documented in cross-cultural studies, recently. We present data which prove that stark...

We use experimental methods to study the power of leading by words. The context is a voluntary contribution mechanism with one-way communication. One group member can send a free-form text message to his fellow players. Contrary to the commonly accepted wisdom that the cooperation-enhancing...

It is well known that communication often serves as a facilitator for cooperation in static games. Yet, communication can serve entirely different purposes in dynamic settings as communication during the game may work as a means for renegotiation, potentially undermining the credibility of...

Trust is a central component of social and economic interactions among humans. While rational self-interest dictates that “investors” should not be trusting and “trustees” should not be trustworthy in one-shot anonymous interactions, behavioral experiments with the “trust game” have...