Work

How executive incentive design affects risk-taking: a literature review

Year: 2022

Type: article

Abstract: This paper presents a review of research regarding the effects of monetary executive incentives on risk-taking. More precisely, we investigate executives’ risk-taking (i) in response to the curvature (steepness, convexity, concavity) of the compensation function and (ii) with regard to reference points. Thereby, we refine and update common textbook knowledge. In this vein, we identify essential moderators at the personal, firm, or environmental level that can be used to assess the effectiveness of the incentive scheme in a specific context. Implications for incentive system design in practice and paths for future research are discussed.

Source: Review of Managerial Science

DOI: 10.1007/s11846-022-00582-0

Authors: Niklas Kreilkamp, Sascha Matanovic, Maximilian Schmidt, Arnt Wöhrmann

Institution: Justus-Liebig-Universität Gießen

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,990

Funder: Dr. Werner Jackstädt-Stiftung