A simulation study of managerial compensation

Brian Sallans, Alexander Pfister, Georg Dorffner

Publication: Working/Discussion PaperWU Working Paper

1 Downloads (Pure)

Abstract

A computational economics model of managerial compensation is presented. Risk-averse managers are simulated, and shown to adopt more risk-taking under the influence of stock options. It is also shown that stock options can both help a new entrant compete in an established market; and can help the incumbent firm fight off competition by promoting new exploration and risk-taking. In the case of the incumbent, the stock options are shown to be most effective when introduced as a response to the arrival of a new entrant, rather than used as a standard part of the compensation package. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherSFB Adaptive Information Systems and Modelling in Economics and Management Science, WU Vienna University of Economics and Business
Publication statusPublished - 2003

Publication series

NameWorking Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"
No.101

WU Working Paper Series

  • Working Papers SFB \Adaptive Information Systems and Modelling in Economics and Management Science\

Cite this