Setting the CEO’s Pay: Economic and Psychological Perspectives

To many, the principal-agent model is the obvious lens through which executive pay should be viewed. Such a sentiment sits uncomfortably with a large number of empirical studies suggesting that the process of determining executive pay seems to be more readily explained by recourse to arguments of managerial power and influence. This paper investigates the micro-underpinnings of boardroom behavior in order to explain this departure … [ Read more ]