Anchoring Employees with the Lure of Stock Options

Experts say stock options are lousy incentive mechanisms for motivating rank-and-file employees to work hard. Why then do large companies continue to use stock options as incentives when they have no direct incentive effects? Paul Oyer, an assistant professor of economics who has studied stock options extensively and specializes in a growing area of HR management known as personnel economics, has tackled this question in his research.

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