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.
|Translated title of the contribution||Incentive schemes and innovative portfolios|
|Number of pages||24|
|Journal||Estudios de Economia|
|Publication status||Published - 1 Jun 2010|
ASJC Scopus subject areas
- Economics and Econometrics