Research
Publications
2023, Review of Financial Studies,Volume 36, Issue 5, 1788–1836.
Winner of the ECGI 2018 working paper prize - Finance
Harvard Law School Forum on Corporate Governance
Incentives and Relative-Wealth Concerns
2014, Quarterly Journal of Finance, 4(04).
Working Papers
Incentive Contracts and Status Concerned Agents
ABSTRACT: Traditionally in economics the actions of agents have been viewed as driven exclusively by individuals' interest in their own wealth. Nonetheless experimental evidence shows that agents enjoy being richer than their peers or, in other words, agents are interested in their status within a group. In this work I derive the optimal linear contract in a moral hazard problem where agents are risk averse and are concerned about how much they are compensated relative to their colleagues. I show that in the presence of such relative wealth concerns 1) it is optimal for the principal to offer a compensation schedule linked to the overall firm or team performance, even when each agent's performance is observable, contractible and independent on the actions taken by his/her colleagues, 2) Relative Performance Evaluation is less desirable for the principal.
Work in Progress
Family Wealth and Family Firm Employement (With Janis Berzins, Himal Gautam, Bogdan Stacescu)
Shareholder Empowerment in a Free Contracting Environment (With Charlotte Ostergaard)
ABSTRACT: In this paper we hypothesize that if the quantity relative to which the agents compare their compensation is random, an agent forms a reference point equal to the expected value of such quantity (average payoff hypothesis). If agents are inequity averse, we show how the average payoff hypothesis produces implications for a principal on whether to enforce a secrecy or disclosure policy for compensation within an organization.