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Evidence on performance pay and risk aversion

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  • Grund, Christian
  • Sliwka, Dirk

Abstract

Making use of a unique representative data set, we find clear evidence that risk aversion has a highly significant and substantial negative impact on the probability that an employee's pay is performance contingent, which confirms the well known risk-incentive trade-off.

Suggested Citation

  • Grund, Christian & Sliwka, Dirk, 2010. "Evidence on performance pay and risk aversion," Economics Letters, Elsevier, vol. 106(1), pages 8-11, January.
    • Handle: RePEc:eee:ecolet:v:106:y:2010:i:1:p:8-11
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    References listed on IDEAS

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