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Hakenes, Hendrik; Schnabel, Isabel - C.E.P.R. Discussion Papers - 2012

analyzes how compensation schemes change in reaction to anticipated bail-outs. If there is a risk-shifting problem, bail-out … becomes flatter and effort decreases. If both types of agency problems are present, a sufficiently large increase in bail-out … perceptions makes it optimal for a welfare-maximizing regulator to impose caps on bank bonuses. In contrast, raising managers …

Persistent link: https://www.econbiz.de/10011083233

Bonus caps, deferrals and bankers' risk-taking

Jokivuolle, Esa; Keppo, Jussi; Yuan, Xuchuan - Suomen Pankki - 2015

We model a banker's future bonuses as a series of call options on the bank's profits and show that bonus caps and deferrals reduce risk-taking. However, the banker's optimal risk-taking also depends on the costs of risk-taking. We calibrate the model to US banking data and show that lengthening...

Persistent link: https://www.econbiz.de/10011207862

Bankers' compensation: Sprint swimming in short bonus pools?

Jokivuolle, Esa; Keppo, Jussi - Suomen Pankki - 2014

The global financial crisis of 2007–2008 has given rise to new regulatory initiatives to put restrictions on the size and the term of bankers' pay. We revisit both theoretically and empirically the question of whether these regulations are justified. We model bonuses as a series of sequential...

Persistent link: https://www.econbiz.de/10010734434

Bank Bonuses and Bail-Outs

Hakenes, Hendrik; Schnabel, Isabel - Max-Planck-Institut zur Erforschung von … - 2013

analyzes how compensation schemes change in reaction to anticipated bail-outs. If there is a risk-shifting problem, bail-out … becomes flatter and effort decreases. If both types of agency problems are present, a sufficiently large increase in bailout … perceptions makes it optimal for a welfare-maximizing regulator to impose caps on bank bonuses. In contrast, raising managers …

Persistent link: https://www.econbiz.de/10010667906

Teacher Behavior under Performance Pay Incentives

Jones, Michael D. - Volkswirtschaftliche Fakultät, … - 2012

student test scores. Economic theory suggests that these programs could alter teacher work effort, cooperation, and retention …

Persistent link: https://www.econbiz.de/10011258656

Union Coverage, Membership and Performance-Related Pay: Are Piece Rates Different?

O'Halloran, Patrick - In: National Institute Economic Review 226 (2013) 1, pp. 30-30

This paper revisits a literature on the links between unionisation and performance-related pay (PRP), which offers a disparate set of results. Part of the reason for this is the usual inability to distinguish between different types of PRP and the lack of rich panel data containing such...

Persistent link: https://www.econbiz.de/10010785964

Hidden Benefits of Reward: A Field Experiment on Motivation and Monetary Incentives

Kvaløy, Ola; Nieken, Petra; Schöttner, Anja - Volkswirtschaftliche Fakultät, … - 2013

We conducted a field experiment in a controlled work environment to investigate the effect of motivational talk and its interaction with monetary incentives. We find that motivational talk significantly improves performance only when accompanied by performance pay. Moreover, performance pay...

Persistent link: https://www.econbiz.de/10010723147

Self-Selection and the Efficiency of Tournaments

Eriksson, Tor; Teyssier, Sabrina; Villeval, Marie-Claire - Institute for the Study of Labor (IZA) - 2006

When exogenously imposed, rank-order tournaments have incentive properties but their overall efficiency is reduced by a high variance in performance (Bull, Schotter, and Weigelt 1987). However, since the efficiency of performance-related pay is attributable both to its incentive effect and to...

Persistent link: https://www.econbiz.de/10005763542

Other-Regarding Preferences and Performance Pay – An Experiment on Incentives and Sorting

Eriksson, Tor; Villeval, Marie-Claire - Institute for the Study of Labor (IZA) - 2004

Variable pay not only creates a link between pay and performance but may also help firms in attracting the more productive employees (Lazear 1986, 2000). However, due to lack of natural data, empirical analyses of the relative importance of the selection and incentive effects of pay schemes are...

Persistent link: https://www.econbiz.de/10005763609

The Impact of Risk Aversion and Stress on the Incentive Effect of Performance Pay

Cadsby, C. Bram; Song, Fei; Tapon, Francis - Department of Economics and Finance, College of … - 2009

We demonstrate that effectiveness of performance-contingent incentives is inversely related to individual risk-aversion levels through two mechanisms: 1) rational optimizing decisions about the amount of effort to supply when effort is positively correlated with risk exposure and 2) the possibly...

Persistent link: https://www.econbiz.de/10008558430