0377-2217/$ see front matter 2012 Elsevier B.V. A doi:10.1016/j.ejor.2012.01.002 ⇑ Corresponding author. Tel.: +31 50 363 9086; fax E-mail address: [email protected] (S. Gensler). The increasing consideration of behavioral aspects in operations management models has prompted greater use of choice-based conjoint (CBC) studies in operations research. Such studies can elicit consumers’ willingness ...

The value that domestic users attribute to reliability of water supply and to the quality of this water is a function of several determinants, such as the source of water, the socioeconomic characteristics of households (per capita income, level of education, etc.), and other variables. Users that have private tap water at home may value less improved availability or more reliable source than h...

The existence of sufficient demand for insurance coverage against infrequent losses is important for the adequate function of insurance markets for natural disaster risks. This study investigates how characteristics of flood risk influence household flood insurance demand based on household surveys undertaken in Germany and the Netherlands. Our analyses confirm the hypothesis that willingness t...

Compensation not only provides incentives to existing managers but attracts new managers to the firm. This paper examines the dual incentive and sorting effects of performance pay in a simple contracting model of endogenous participation. The main result is that sorting dampens optimal pay-performance sensitivity (PPS). This occurs because PPS beyond a nominal amount transfers unnecessary rent ...

The appraisal portion of the strategic plan has long been a problem. How do you reward the achievement and performance of individuals as they operate the organization's strategic plan? How do you use the performance appraisal area to motivate the management team to achieve the objective in the strategic plan? How do you provide incentive for your people to stay with your organization? How do yo...

We study large discrete decreases in CEO pay and compare them to CEO forced turnover. The determinants are similar, as are the performance improvements after the action. After the pay cut, the CEO pay-for-performance sensitivity is abnormally high, such that the CEO can restore his pay level by reversing the poor performance. After either a pay cut or forced turnover, CEOs reduce investment and...

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 sec...

This paper introduces moral hazard into a standard general equilibrium model with heterogeneous …rms, to study the impact of trade liberalization on wage inequality between identical workers. I show that trade liberalization operates on two margins of inequality, generating betweenand within-…rm wage dispersion. While the former channel has been studied in recent papers, the latter is novel in ...

This paper provides evidence that managers have private information they exploit for …nancial gain at the expense of shareholders. It develops a model of optimal contracting to show that moral hazard, hidden actions taken by agents, can rationalize why a principal would optimally induce agents to bene…t from their private information. Estimates from a structural model shows that moral hazard is...