Harris, Qun
[Verfasser:in]
;
Mercieca, Analise
[Sonstige Person, Familie und Körperschaft];
Soane, Emma
[Sonstige Person, Familie und Körperschaft];
Tanaka, Misa
[Sonstige Person, Familie und Körperschaft]
How Do Bonus Cap and Malus Affect Risk and Effort Choice? Insight from a Lab Experiment
Erschienen in:Bank of England Working Paper ; No. 736
Umfang:
1 Online-Ressource (31 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.3210518
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 6, 2018 erstellt
Beschreibung:
We conducted a lab experiment to examine how bonus caps and malus affect individuals' choices of risk and effort. We find that a bonus structure that rewards individuals proportionally to realised investment returns, but does not penalise negative returns, encourages risk-taking; while a bonus cap and malus mitigate risk-taking. However, the difference in risk-taking between the bonus cap and malus treatment groups and the proportional bonus group weakened significantly when the participants' bonus was conditional on hitting an absolute or relative performance target. We also find some evidence that the bonus cap discourages project search effort relative to the proportional bonus, whereas the difference in the levels of effort between the malus treatment group and the proportional bonus group was not statistically significant