The optimal timing of executive compensation

We propose a new continuous-time principal-agent model to study the optimal timing of stock-based incentives, when the effects of managerial actions materialize with a lag and are only progressively understood by shareholders. On the one hand, early contingent compensation hedges the manager against the accumulation of exogenous shocks. On the other hand, the fact that initial information asymmetries between the manager and shareholders are progressively resolved suggests that contingent compensation should be postponed. We introduce two possible types of managerial short-termism, and show that they both result in lower-powered incentives and more deferred compensation

Aversion to the variability of pay and the structure of executive compensation contracts

This paper presents a new implication of an aversion toward the variance of pay (“risk aversion”) for the structure of managerial incentive schemes. In a principal-agent model in which the effort of a manager with mean-variance preferences affects the mean of a performance measure, we find that managerial compensation must be such that the variance of payments is decreasing in effort. From an ex-ante perspective, which is relevant for effort inducement, this maximizes the rewards associated to high effort, and the punishments associated to low effort. An important practical implication is that convex incentive contracts do not satisfy this necessary condition for optimality, which calls into question the practice of granting executive stock options. The paper therefore contributes to the debate on the efficiency of executive compensation

Study of the desorption of ethylene oxide fixed on various materials during sterilization by a new procedure

A continuous sterilization process using ethylene oxide was studied in comparison with a classical method in order to evaluate gas retention as a function of time and temperature on polyethylene, PVC, and rubber materials

Explaining the structure of CEO incentive pay with decreasing relative risk aversion

It is established that the standard principal-agent model cannot explain the structure of commonly used CEO compensation contracts if CRRA preferences are postulated. However, we demonstrate that this model has potentially a high explanatory power with preferences with decreasing relative risk aversion, in the sense that a typical CEO contract is approximately optimal for plausible preference parameters

Aversion to the variability of pay and optimal incentive contracts

In a moral hazard setting with a performance additive in effort and a symmetrically distributed noise term, I show that compensation contracts which are convex in performance are suboptimal when the agent has mean-variance preferences. With step contracts, I show that sticks are more efficient than carrots: an exogenously given lower bound on payments is binding at the optimum. Intuitively, the variance of the agent's pay conditional on a high effort should be as low as possible, while it should be as high as possible conditional on a low effort. From an ex ante perspective, which is relevant for effort inducement, this maximizes the rewards associated to high effort, and the punishments associated to low effort. These results call into question the widespread use of stock-options and contracts with rewards-like features to provide incentives to risk averse executives

Understanding Community Support Towards Three Marine Protected Areas in the Visayas Region of the Philippines

Community support towards Natural Resource Management (NRM) strategies is thought to be crucial for their success and sustainability. This study considers the case of community based Marine Protected Areas (MPAs) in the Philippines where, despite their proliferation many are failing to achieve their objectives. The lack of acceptance and support from the adjacent community is thought to lead to these “failures” of MPAs. Very little work however has been carried out to understand support towards MPAs and what influences it. I define support as the combination of attitudes and relevant environmental action undertaken with regards to the already implemented MPA. This thesis seeks to understand “community support” by determining: 1. What factors influence attitudes towards MPAs? 2. What factors influence actions towards MPAs? 3. What is the relationship between attitudes towards the MPA and MPA related actions? I combine both quantitative and qualitative research methods to help determine which factors are associated with community support but also to help explain how these factors influence support. Fisher questionnaires, Semi Structured Interviews, In depth interviews and Focus Groups were carried out at three different villages with adjacent MPAs within the Visayas region of the Philippines. A number of MPA design and MPA management factors as well as individual feelings, emotions and socio-economic characteristics were found to influence support through a multitude of ways. The plurality of factors identified, their interconnectedness and the way their impacts on support varies through time and between individuals within a community makes it clear there is no simple solution as to which set of factors are necessary for prolonged support. Nevertheless we now have a clearer idea as to how best to design, manage and implement an MPA in a way that is supported by the adjacent community

Is the error-reaction time correlation in category verification tasks evidence of fuzzy limits in categories?

This thesis attempts to review evidence supporting a positive error-reaction time correlation in category verification tasks. All reviewed models predict that categorization errors will increase when the time needed to make a membership judgement increases. This is explained either as a result of the structure of categories (e.g., as another manifestation of category fuzziness), or as a product of the category verification process (e.g., attributed in general memory models to the random nature of the retrieval process). Two specific models that attempt to explain the correlation were tested. One that assumes the correlation is the result of incomplete or inconsistent concept retrieval when subjects are under speed emphasis conditions, and other that assumes the correlation is not a psychological phenomenon, but the result of grouping data across subjects (the common data gathering procedure in the field). Results support this latter explanation of the error-reaction time correlation. It is shown that if the effect of intersubject disagreement in category membership judgements over errors is statistically controlled, the correlation significantly decreases for both categories used. The reduction in the calculated correlation is such that for one category (furniture) the magnitude of the effect is not significantly different from zero, and for the other (vehicle) it accounts for a mere 6% of the variance of categorization errors. The implications for models of category membership decisions are discussed, and a two stage model of the process that does not predict the correlation (but that can explain its rise when accumulated data is used) is suggested

The effect of risk preferences on the valuation and incentives of compensation contracts

We use a comparative approach to study the incentives provided by different types of compensation contracts, and their valuation by risk averse managers, in a fairly general setting. We show that concave contracts tend to provide more incentives to risk averse managers, while convex contracts tend to be more valued by prudent managers. Thus, prudence can contribute to explain the prevalence of stock-options in executive compensation. We also present a condition on the utility function which enables to compare the structure of optimal contracts associated with different risk preferences

Resolving a search for words as an interactional resource for achieving professional activity goals

This is an analysis of several interactions arising during two multilingual professional meetings convened in two international companies, one in Paris and the other in Beijing. Through the compilation of word searching attempts during interactions in ELF (English as lingua franca) we shall show how the participants orient themselves individually or collectively to resolve their verbal difficulty. It has been observed that, in ordinary conversations, when a linguistic and interactional problem emerges (Schegloff et al. 1977; Gülich 1986), the participants use certain methods to solve difficulties such as lexical production (Goodwin & Goodwin 1986; Brouwer 2003), or the adequacy of the linguistic forms to the current interactive activity. These methods are primarily based on the preference for self-repair (Schegloff 1977) and for progressivity (Stivers & Robison 2006). The preference for self-repair can take different cooperation forms to resolve an interactional problem. The other-repair phenomenon becomes the collective form to ensure the progress of the activity, to which all participants contribute in an ordered way. It can have consequences for participation frameworks, which are modified to solve a specific problem, and resume the main activity