Does Bonus Deferral Reduce Risk-Taking?
24 Pages Posted: 25 Jun 2016
There are 2 versions of this paper
Does Bonus Deferral Reduce Risk Taking?
Number of pages: 28
Posted: 22 Aug 2010
Last Revised: 23 Jul 2014
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416
Date Written: November 30, 2015
Abstract
We characterize continuous-time risk-taking and show that the introduction of deferral increases risk-taking at any time when the realized asset value is large or small. For those realized asset values in between, we derive the parameterizations of deferral for which risk-taking decreases, and discuss trade-offs in setting the deferral parameters.
Keywords: bonus, risk-taking, risk aversion, deferral ratio
Suggested Citation: Suggested Citation
Leisen, Dietmar P. J., Does Bonus Deferral Reduce Risk-Taking? (November 30, 2015). Journal of Risk, Vol. 18, No. 2, 2015, Available at SSRN: https://ssrn.com/abstract=2799719
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