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Common Shocks and Relative Compensation


  • Michael Magill


  • Martine Quinzii



No abstract is available for this item.

Suggested Citation

  • Michael Magill & Martine Quinzii, 2006. "Common Shocks and Relative Compensation," Annals of Finance, Springer, vol. 2(4), pages 407-420, October.
  • Handle: RePEc:kap:annfin:v:2:y:2006:i:4:p:407-420
    DOI: 10.1007/s10436-006-0044-0

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    References listed on IDEAS

    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Rogerson, William P, 1985. "The First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 53(6), pages 1357-1367, November.
    3. Marco Celentani & Rosa Loveira-Pazó, 2004. "What form of relative performance evaluation?," Economics Working Papers 744, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Green, Jerry R & Stokey, Nancy L, 1983. "A Comparison of Tournaments and Contracts," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 349-364, June.
    5. Dilip Mookherjee, 1984. "Optimal Incentive Schemes with Many Agents," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 433-446.
    6. Magill, Michael & Shafer, Wayne, 1991. "Incomplete markets," Handbook of Mathematical Economics,in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 30, pages 1523-1614 Elsevier.
    7. Sinclair-Desgagne, Bernard, 1994. "The First-Order Approach to Multi-signal Principal-Agent Problems," Econometrica, Econometric Society, vol. 62(2), pages 459-466, March.
    8. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    9. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563 Elsevier.
    10. Marco LiCalzi & Sandrine Spaeter, 2003. "Distributions for the first-order approach to principal-agent problems," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 167-173, January.
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    Cited by:

    1. Kellner, Christian, 2015. "Tournaments as a response to ambiguity aversion in incentive contracts," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 627-655.
    2. Martine Quinzii & Michael Magill, 2005. "An Equilibrium Model of Managerial Compensation," Working Papers 53, University of California, Davis, Department of Economics.
    3. Fleckinger, Pierre, 2012. "Correlation and relative performance evaluation," Journal of Economic Theory, Elsevier, vol. 147(1), pages 93-117.
    4. Magill, Michael & Quinzii, Martine, 2008. "Normative properties of stock market equilibrium with moral hazard," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 785-806, July.

    More about this item


    Optimal contracts; Reward increasing (decreasing) in other agents’ outcomes; Likelihood ratio and common shock; Effect of common shock on marginal product of effort; D82; G30; J33; M52;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects


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