TY - JOUR
T1 - Incentive schemes for executive officers when forecasts matter
AU - Vergés, Joaquim
PY - 2010/7
Y1 - 2010/7
N2 - This paper develops a new perspective on results-based incentive schemes for non-CEO managers. It shows that it is possible to establish incentive schemes that take into account both the actual output obtained and the forecast figure previously established as a target, without the negative consequences derived from the perverse loop of hiding-ratchet effects. A general linear two-staged scheme is proposed. In addition, relevant properties of this incentive system are stated that show how principals (corporate management) may determine the expected forecasting behavior of agents (executive officers) by suitably choosing the scheme parameters according to a simple set of rules. © 2009 John Wiley & Sons, Ltd.
AB - This paper develops a new perspective on results-based incentive schemes for non-CEO managers. It shows that it is possible to establish incentive schemes that take into account both the actual output obtained and the forecast figure previously established as a target, without the negative consequences derived from the perverse loop of hiding-ratchet effects. A general linear two-staged scheme is proposed. In addition, relevant properties of this incentive system are stated that show how principals (corporate management) may determine the expected forecasting behavior of agents (executive officers) by suitably choosing the scheme parameters according to a simple set of rules. © 2009 John Wiley & Sons, Ltd.
UR - http://www.scopus.com/inward/record.url?scp=77954480448&partnerID=8YFLogxK
U2 - https://doi.org/10.1002/mde.1487
DO - https://doi.org/10.1002/mde.1487
M3 - Article
SN - 0143-6570
VL - 31
SP - 339
EP - 352
JO - Managerial and Decision Economics
JF - Managerial and Decision Economics
IS - 5
ER -