Arbeitspapier

Performance Pay and Risk Aversion

A main prediction of agency theory is the well known risk-incentive trade-off. Incentive contracts should be found in environments with little uncertainty and for agents with low degrees of risk aversion. There is an ongoing debate in the literature about the first trade-off. Due to lack of data, there has so far been hardly any empirical evidence about the second. Making use of a unique representative data set, we find clear evidence that risk aversion has a highly significant and substantial negative impact on the probability that an employee's pay is performance contingent.

Language
Englisch

Bibliographic citation
Series: SFB/TR 15 Discussion Paper ; No. 101

Classification
Wirtschaft
Compensation Packages; Payment Methods
Personnel Economics: Compensation and Compensation Methods and Their Effects
Information, Knowledge, and Uncertainty: General
Subject
Agency theory
GSOEP
Incentives
Pay for performance
Performance appraisal
Risk
Risk aversion

Event
Geistige Schöpfung
(who)
Grund, Christian
Sliwka, Dirk
Event
Veröffentlichung
(who)
Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
(where)
München
(when)
2006

DOI
doi:10.5282/ubm/epub.13450
Handle
URN
urn:nbn:de:bvb:19-epub-13450-8
Last update
20.09.2024, 8:25 AM CEST

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Grund, Christian
  • Sliwka, Dirk
  • Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)

Time of origin

  • 2006

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