Incentive Schemes and Innovative Portfolios
AbstractThis article characterizes the properties of the compensation scheme of delegated portfolio management that would lead to the selection of high risk-high return portfolios. In particular, it provides conditions under which a non-monotone payment structure emerges as an optimal contract, which rewards extreme results and punishes moderate ones.
Keywords Executive compensation, delegated portfolio management, nonmonotone incentive schemes, non-monotone likelihood ratio property
How to Cite
Loyola, G., & Portilla, Y. (2016). Incentive Schemes and Innovative Portfolios. Estudios de Economía, 37(1), pp. 43-66. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40124/43348