Managerial Expertise, Private Information, and Pay-Performance Sensitivity
Citations
105 citations
Cites background from "Managerial Expertise, Private Infor..."
...(A.9) We infer that the coefficient )( 00 aβ belongs to a direct revelation mechanism if it is increasing in Period 0 ability (i.e., 0) ≥( 00′ aβ ), in agreement with Salanie (2005, p. 31) and Dutta (2008)....
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...21 2 1001 2 1100111001110011 2 ccRayaaayadzayzraya a a σδββλβλα −−−+= ∫ 9 This is a common assumption in mechanism design (Bolton and Dewatripont 2005; Salanie 2005; Dutta 2008)....
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...Second, the agent’s ability could be multidimensional (McAfee et al. 1989; Dutta 2008)....
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...As in Dutta (2008), Datar et al. (2001), Holmstrom and Milgrom (1987), and Feltham and Xie (1994), we also assume the agent has constant absolute risk aversion (utility) with a coefficient of absolute risk aversion (CARA) of R such that his Period 0 utility is: ]}2/)())),((,([exp{))()),),((,(( 0 2…...
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77 citations
Additional excerpts
...Similar to this paper, Dutta (2008) features countervailing incentives in a LEN model with adverse selection, but in Dutta (2008), countervailing incentives are driven by the correlation between a productive agent s productivity and her outside option or reservation wage....
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67 citations
Cites background from "Managerial Expertise, Private Infor..."
...We distinguish between managers’ experience (e.g., Schmidt, Hunter, & Outerbridge, 1986) – defined as their work tenure (Fisher & Govindarajan, 1992) – and managers’ expertise (e.g., Dutta, 2008) – defined as their focus in a specific work domain....
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67 citations
References
233 citations
"Managerial Expertise, Private Infor..." refers background in this paper
...…higher pay-performance sensitivities in compensation contracts of managers in new economy knowledge-based firms.20 Consistent with this prediction, Anderson et al. (2000), Core and Guay (2001), Ittner et al. (2003), and Murphy (2003) find that performance-based compensation is more prominent in…...
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...Empirical evidence in Anderson et al. (2000), Core and Guay (2001), Ittner et al. (2003), and Murphy(2003) suggest that performance-based pays (through stock options and other performance measures) play a more prominent role in knowledge-intensive new-economy firms than in traditional firms....
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"Managerial Expertise, Private Infor..." refers background or methods or result in this paper
...See also Lewis and Sappington (1989b). where a∗ ≡ λ k denotes the induced effort choice....
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...This contrasts with Lewis and Sappington (1989a) in which the firm’s dominant reporting incentive (and hence the nature of distortion in the optimal production schedule) varies with the firm’s marginal cost parameter θ because the first-best production quantity is a function of θ ....
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...In contrast Lewis and Sappington (1989a) find that optimal mechanisms would generally induce under-production from some types and over-production from others....
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...The assumption of full participation is also imposed in Dutta (2003), Lewis and Sappington (1989a) and (1989b), and Maggi and Rodriguez-Clare (1995)....
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...Dutta (2003), Lewis and Sappington (1989a), and Maggi and Rodriguez-Clare (1995) also consider settings in which the agent’s reservation utility depends on his type....
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