This exercise provides an opportunity to gain an insight into the design, negotiation, and responding to incentives. The setting is investment management. A class is divided into a certain number of securities firms. Every company has a CEO and begins with four portfolio manager (PM) to manage their portfolios by. Of a limited group of assets The game takes about two weeks and is divided into three periods. The period will last from two to four days. At the end … Read more »

This exercise provides an opportunity to gain an insight into the design, negotiation, and responding to incentives. The setting is investment management. A class is divided into a certain number of securities firms. Every company has a CEO and begins with four portfolio manager (PM) to manage their portfolios by. Of a limited group of assets The game takes about two weeks and is divided into three periods. The period will last from two to four days. At the end of each period, new money flows to high-performing portfolios flow wheras funds from underperforming portfolios simulated Posts by investors. CEOs and PMs negotiate compensation arrangements and PMS can move from one company to another, subject to certain costs and rules about how much of their portfolio to take with them to their new company. CEOs seek to maximize the value of their company at the end of the game, while PMs try to maximize their total remuneration during the game.
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from
Jason R. Barro,
Brian J. Hall,
Jonathan P. Lim
Source: exercises
13 pages.
Publication Date: Feb 22, 2002. Prod #: 902197-PDF-ENG
Incentives play HBR case solution

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