The Impact of Incentive Pay on Corporate Crime

The Impact of Incentive Pay on Corporate Crime

This paper presents a moral hazard model analyzing the agent's incentive to commit corporate crime. The principal can only observe profits which the agent can increase by committing crime or exerting effort. It is shown how different incentive contracts, i.e., thresholdlinear, capped bonus...

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Veröffentlicht in:MAGKS - Joint Discussion Paper Series in Economics (Band 52-2017)
1. Verfasser: Herold, Daniel
Format: Artikel
Sprache:Englisch
Veröffentlicht: Philipps-Universität Marburg 2017
Schlagworte:
cartels
Wirtschaft
corporate crime
moral hazard
incentive pay
Economics
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Beschreibung
Zusammenfassung:This paper presents a moral hazard model analyzing the agent's incentive to commit corporate crime. The principal can only observe profits which the agent can increase by committing crime or exerting effort. It is shown how different incentive contracts, i.e., thresholdlinear, capped bonus and linear contracts, can be adjusted in order to promote agent's law abiding behavior. Any adjustment implies a loss in internal efficiency which decreases in individual sanctions imposed on the agent.
Umfang:34 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0549

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