Incentive Schemes and Innovative Portfolios

  • Gino Loyola Departamento de Control de Gestión y Sistemas de Información, Universidad de Chile, Diagonal Paraguay 257, Of. 1303, Santiago
  • Yolanda Portilla Facultad de Economía y Negocios, Universidad Diego Portales, Manuel Rodríguez Sur 253, Santiago


This 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