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Incentive Systems for Risky Investment Decisions Under Unknown Preferences: Ortner et al. Revisited

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  • Josef Schosser

    (Faculty of Business Administration and Economics, University of Passau, 94030 Passau, Germany)

Abstract

Ortner et al. ( Manage. Account. Res. 36(1):43–50, 2017) propose the State-Contingent Relative Benefit Cost Allocation Scheme as an incentive system for risky investment decisions. The note at hand reveals the information distribution implicitly assumed within the framework of this study. Based on this information distribution, both simpler and more powerful ways to induce consistency exist.

Suggested Citation

  • Josef Schosser, 2018. "Incentive Systems for Risky Investment Decisions Under Unknown Preferences: Ortner et al. Revisited," Games, MDPI, vol. 9(2), pages 1-4, May.
    • Handle: RePEc:gam:jgames:v:9:y:2018:i:2:p:26-:d:146273
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    References listed on IDEAS

    as
    1. Lambert, Richard A., 2001. "Contracting theory and accounting," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 3-87, December.
    2. Rogerson, William P, 1997. "Intertemporal Cost Allocation and Managerial Investment Incentives: A Theory Explaining the Use of Economic Value Added as a Performance Measure," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 770-795, August.
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    Cited by:

    1. Schosser, Josef, 2019. "Consistency between principal and agent with differing time horizons: Computing incentives under risk," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1113-1123.
    2. Josef Schosser, 2018. "Reply to Ortner," Games, MDPI, vol. 9(4), pages 1-2, November.
    3. Julia Ortner, 2018. "Comment on Schosser (2018) “Incentive Systems for Risky Investment Decisions under Unknown Preferences: Ortner et al. Revisited”," Games, MDPI, vol. 9(4), pages 1-5, November.

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