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In the laboratory experiment presented in this video, experimental CEOs were compensated either through stock options or restricted company stock. It shows that stock options induce excessive risk-taking in some cases and that company performance is generally better under compensation through restricted company stock. As FERDINAND M. VIEIDER points out, the main determinant of risk-taking under compensation through stock options was found to be the personal asset position of the experimental CEO.


Ferdinand M. Vieider is the Head of the Junior Research Group ‘Risk and Development’ at Berlin Social Science Center (WZB) and Professor in Economics at the University of Reading (UK). In his research he focuses on development economics, behavioral economics, decision making under risk and uncertainty, and policy evaluation.

He was an Excellence Fellow at Ludwig-Maximilians-University Munich and a ‘Franco Romani’ Fellow of the Luigi Einaudi Foundation (Rome, Italy).


University of Reading

The University of Reading is defined and driven forward by its research. Our research helps us to discover more about ourselves and the world we live in; to build a stronger and more resilient economy; to enhance social and individual wellbeing; to deliver 21st century teaching; and to influence policy and practice both within the UK and throughout the world. We are focused on understanding and adapting to global challenges, as well as striving to secure the common-good, the diversity of human culture, and the value of the arts within society. Research culture is part of everything we do at Reading: from our thriving undergraduate programmes in which students are producers rather than just consumers of knowledge, through our vibrant postgraduate research community, our support services and our academics, to the most distinguished of our research professors. Everybody has a role to play. We have both ambition and capability. Our research will make a difference to the world. ( Source )
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Original publication

Risk Taking of Executives under Different Incentive Contracts: Experimental Evidence

Mathieu Lefebvre and Ferdinand M. Vieider
Journal of Economic Behavior and Organization
Published in 2013

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