Endogenous managerial compensation contracts in experimental quantity-setting duopolies
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Other documents of the author: Barreda-Tarrazona, Iván; Georgantzis, Nikolaos; Manasakis, Constantine; Mitrokostas, Evangelos; Petrakis, Emmanuel
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comunitat-uji-handle2:10234/8643
comunitat-uji-handle3:10234/8644
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Title
Endogenous managerial compensation contracts in experimental quantity-setting duopoliesAuthor (s)
Date
2016Publisher
ElsevierISSN
0264-9993Type
info:eu-repo/semantics/articlePublisher version
http://www.sciencedirect.com/science/article/pii/S0264999315004241Version
info:eu-repo/semantics/submittedVersionAbstract
Given the ongoing debate on managerial compensation schemes, our paper offers empirical insights on
the strategic choice of firms’ owners over the terms of a managerial compensation contract, as a commitment
device ... [+]
Given the ongoing debate on managerial compensation schemes, our paper offers empirical insights on
the strategic choice of firms’ owners over the terms of a managerial compensation contract, as a commitment
device aiming at gaining competitive advantage in the product market. In a quantity setting duopoly
we experimentally test whether firms’ owners compensate their managers through contracts combining
own profits either with revenues or with relative performance, and the resulting managerial behaviour
in the product market. Prominent among our results is that firms’ owners choose relative performance
over profit revenue contracts more frequently. Further, firms’ owners successfully induce a more aggressive
behaviour by their managers in the market, by setting incentives which deviate from strict profit
maximization. [-]
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Economic Modelling 54 (2016) 205–217Rights
0264-9993/© 2016 Elsevier B.V. All rights reserved.
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- ECO_Articles [693]