Illusory correlation in the remuneration of chief executive officers: It pays to play golf, and well

Illusory correlation refers to the use of information in decisions that is uncorrelated with the relevantcriterion. We document illusory correlation in CEO compensation decisions by demonstrating thatinformation, that is uncorrelated with corporate performance, is related to CEO compensation. We usepublicly available data from the USA for the years 1998, 2000, 2002, and 2004 to examine the relationsbetween golf handicaps of CEOs and corporate performance, on the one hand, and CEO compensationand golf handicaps, on the other hand. Although we find no relation between handicap and corporateperformance, we do find a relation between handicap and CEO compensation. In short, golfers earnmore than non-golfers and pay increases with golfing ability. We relate these findings to the difficultiesof judging compensation for CEOs. To overcome this and possibly other illusory correlations inthese kinds of decisions, we recommend the use of explicit, mechanical decision rules.

Estudi neurofisiològic del control executiu de l'atenció en l'esquizofrènia

Report for the scientific sojourn carried out at the Departament de Psicologia de la Universitat de les Illes Balears, Spain, from May until July 2006. Abnormalities in executive functions, including set shifting ability, represent a cardinal feature in schizophrenia. This ability to adapt behavior to changing environmental events or contingencies requires a mechanism for switching attention between learned stimulus-response associations, or task-sets. This project aimed at gaining further knowledge on the brain mechanisms related to the executive control of attention in schizophrenia during the performace of a task switching paradigm. Furthermore, a secondary goal was to further examine the interrelationships between endogenous and exogenous control processes in task set switching.

Déficits y sesgos neurocognitivos y afectivos en la toma de decisiones de jugadores patológios y otros trastornos

Los déficits y sesgos tanto cognitivos como afectivos han sido fuente creciente de interés en el ámbito de la Neurociéncia de los Trastornos Mentales. En este proyecto, que se inicia en 2004 y finaliza a finales de 2008, se han estudiado los siguientes Trastornos Mentales: Juego Patológico (JP), Trastornos de la Conducta Alimentaria (TCA) y Trastornos Depresivos. En esta memoria nos centraremos en resumir parte de los resultados obtenidos en un estudio sobre JP y toma de decisiones (articulo en revisión y pendiente de aceptación) y otro de funcionamiento ejecutivo en JP y Bulimia Nerviosa (BN) (artículo en prensa). Resumiento el primer estudio los JP (N=32) muestran un proceso de toma de decisiones sesgado por la búsqueda de recompensa en forma de elevada toma de riesgos en comparación con Controles Sanos (CS). También se observan déficits en flexibilidad cognitiva pero no en control inhibitorio entre JP y CS. Los resultados descartan miopía conductual para lo toma de decisiones en JP, pero apuntan a un sesgo cognitivo-afectivo, en el que el control de los impulsos jugaría un papel relevante, en forma de ilusión de control, para los procesos de toma de decisiones con recompensa inmediata pero con castigo diferido, medidos por una prueba de toma de decisiones (IGT ABCD). En el segundo estudio, basándose en las vulnerabilidadades compartidas descritas entre JP y BN se comparó el funcionamiento ejecutivo de mujeres con JP y BN. Tras la administración del WCST y Stroop y ajustando el análisis por edad y educación, las JP mostraron mayor afectación, en concreto mayor porcentaje de errores perservaritvos, menor nivel de respuestas conceptuales y mayor número de ensayos administrados, mientras que el grupo de BN mostró mayor porcentaje de errores no persevarativos. Ambas, mujeres JP y BN mostraron disfunción ejecutiva en relación a los CS pero con diferentes correlatos específcos.

Behavioral Assumptions and Management Ability: A Tentative Test

The paper explores the consequences that relying on different behavioral assumptions in training managers may have on their future performance. We argue that training with an emphasis on the standard assumptions used in economics (rationality and self-interest) leads future managers to rely excessively on rational and explicit safeguarding, crowding out instinctive contractual heuristics and signaling a 'bad' type to potential partners. In contrast, human assumptions used in management theories, because of their diverse, implicit and even contradictory nature, do not conflict with the innate set of cooperative tools and may provide a good training ground for such tools. We present tentative confirmatory evidence by examining how the weight given to behavioral assumptions in the core courses of the top 100 business schools influences the average salaries of their MBA graduates. Controlling for the average quality of their students and some other schools' characteristics, average salaries are significantly greater for those schools whose core MBA courses contain a higher proportion of management courses as opposed to courses based on economics or technical disciplines.

One person in the battlefield is not a warrior: Self-construal, perceived ability to make a difference, and socially responsible behavior

We suggest that cultivating an individual's connectedness to others promotes sociallyresponsible behavior both directly and indirectly through increased perceived abilityto make a difference. Individuals whose interdependent self is more prominent feel theyhave more of an impact on larger scale societal outcomes and, therefore, engage more insocially responsible behaviors than do individuals whose independent self is moreprominent. We test these hypotheses in two experiments in which participants makefinancial contributions or exert an effort for a social cause. In a survey, we find thatperceived effectiveness mediates the effect of self-construal on socially responsibleconsumption.

On the valuation and incentive effects of executive cash bonus contracts

Executive compensation packages are often valued in an inconsistent manner: while employee stock options (ESOs) are typically valued ex-ante, cash bonuses are valued ex-post. This renders the existing valuation models of employee compensation packages theoretically unsatisfactory and, potentially, empirically distortive. In this paper, we propose an option-based framework for ex-ante valuation of cash bonus contracts. After obtaining closed-form expressions for ex-ante values of several frequently used types of bonus contracts, we utilize them to explore the e¤ects that the shape of a bonus contract has on the executive s attitude toward risk-taking. We, also, study pay-performance sensitivity of such contracts. We show that the terms of a bonus contract can dramatically impact both risk-taking behavior as well as pay-performance incentives. Several testable predictions are made, and venues of future research outlined.

The organization of research corporations and researcher ability

This paper analyzes the formation of Research Corporations as an alternative governance structure for performing R&D compared to pursuing in-house R&D projects. Research Corporations are privatefor-profit research centers that bring together several firms with similar research goals. In a Research Corporation formal authority over the choice of projects is jointly exercised by the top management of the member firms. A private for-profit organization cannot commit not to interfere with the project choice of the researchers. However, increasing the number of member firms of the Research Corporation reduces the incentive of member firms to meddle with the research projects of researchers because exercising formal authority over the choice of research projects is a public good. The Research Corporation thus offers researchers greater autonomy than a single firm pursuing an identical research program in its in-house R&D department. This attracts higher ability researchers to the Research Corporation compared to the internal R&D department. The paper uses the theoretical model to analyze the organization of the Microelectronics and Computer Technology Corporation (MCC). The facts of this case confirm the existence of a tension between control over the choice of research projects and the ability of researchers that the organization is able to attract or hold onto.

What form of relative performance evaluation?

We study relative performance evaluation in executive compensation whenexecutives have private information about their ability. We assume that thejoint distribution of an individual firm s profit and market movements dependson the ability of the executive that runs the firm. In the equilibrium of theexecutive labor market, compensation schemes exploit this fact to sortexecutives of di ?erent abilities. This implies that executive compensation isincreasing in own performance, but may also be increasing in industryperformance-a sharp departure from standard relative performance evaluation.This result provides an explanation for the scarcity of relative performanceconsiderations in executive compensation documented by the empirical literature.

Behavioral assumptions and management ability

The paper explores the consequences that relying on different behavioral assumptions intraining managers may have on their future performance. We argue that training with anemphasis on the standard assumptions used in economics (rationality and self-interest) is goodfor technical posts but may also lead future managers to rely excessively on rational and explicitsafeguarding, crowding out instinctive relational heuristics and signaling a bad human type topotential partners. In contrast, human assumptions used in management theories, because oftheir diverse, implicit and even contradictory nature, do not conflict with the innate set ofcooperative tools and may provide a good training ground for such tools. We present tentativeconfirmatory evidence by examining how the weight given to behavioral assumptions in the corecourses of the top 100 business schools influences the average salaries of their MBA graduates.Controlling for the self-selected average quality of their students and some other schools characteristics, average salaries are seen to be significantly greater for schools whose core MBAcourses contain a higher proportion of management courses as opposed to courses based oneconomics or technical disciplines.

Predictive ability of severe rainfall events over Catalonia for the year 2008

This paper analyses the predictive ability of quantitative precipitation forecasts (QPF) and the so-called "poor-man" rainfall probabilistic forecasts (RPF). With this aim, the full set of warnings issued by the Meteorological Service of Catalonia (SMC) for potentially-dangerous events due to severe precipitation has been analysed for the year 2008. For each of the 37 warnings, the QPFs obtained from the limited-area model MM5 have been verified against hourly precipitation data provided by the rain gauge network covering Catalonia (NE of Spain), managed by SMC. For a group of five selected case studies, a QPF comparison has been undertaken between the MM5 and COSMO-I7 limited-area models. Although MM5's predictive ability has been examined for these five cases by making use of satellite data, this paper only shows in detail the heavy precipitation event on the 9¿10 May 2008. Finally, the "poor-man" rainfall probabilistic forecasts (RPF) issued by SMC at regional scale have also been tested against hourly precipitation observations. Verification results show that for long events (>24 h) MM5 tends to overestimate total precipitation, whereas for short events (¿24 h) the model tends instead to underestimate precipitation. The analysis of the five case studies concludes that most of MM5's QPF errors are mainly triggered by very poor representation of some of its cloud microphysical species, particularly the cloud liquid water and, to a lesser degree, the water vapor. The models' performance comparison demonstrates that MM5 and COSMO-I7 are on the same level of QPF skill, at least for the intense-rainfall events dealt with in the five case studies, whilst the warnings based on RPF issued by SMC have proven fairly correct when tested against hourly observed precipitation for 6-h intervals and at a small region scale. Throughout this study, we have only dealt with (SMC-issued) warning episodes in order to analyse deterministic (MM5 and COSMO-I7) and probabilistic (SMC) rainfall forecasts; therefore we have not taken into account those episodes that might (or might not) have been missed by the official SMC warnings. Therefore, whenever we talk about "misses", it is always in relation to the deterministic LAMs' QPFs.

The switch from conventional to atypical antipsychotic treatment should not be based exclusively on the presence of cognitive deficits. A pilot study in individuals with schizophrenia.

Background: Atypical antipsychotics provide better control of the negative and affective symptoms of schizophrenia when compared with conventional neuroleptics; nevertheless, their heightened ability to improve cognitive dysfunction remains a matter of debate. This study aimed to examine the changes in cognition associated with long-term antipsychotic treatment and to evaluate the effect of the type of antipsychotic (conventional versus novel antipsychotic drugs) on cognitive performance over time. Methods: In this naturalistic study, we used a comprehensive neuropsychological battery of tests to assess a sample of schizophrenia patients taking either conventional (n = 13) or novel antipsychotics (n = 26) at baseline and at two years after. Results: Continuous antipsychotic treatment regardless of class was associated with improvement on verbal fluency, executive functions, and visual and verbal memory. Patients taking atypical antipsychotics did not show greater cognitive enhancement over two years than patients taking conventional antipsychotics. Conclusions Although long-term antipsychotic treatment slightly improved cognitive function, the switch from conventional to atypical antipsychotic treatment should not be based exclusively on the presence of these cognitive deficits.

Individual differences in control of language interference in late bilinguals are mainly related to general executive abilities

Background: Recent research based on comparisons between bilinguals and monolinguals postulates that bilingualism enhances cognitive control functions, because the parallel activation of languages necessitates control of interference. In a novel approach we investigated two groups of bilinguals, distinguished by their susceptibility to cross-language interference, asking whether bilinguals with strong language control abilities ('non-switchers") have an advantage in executive functions (inhibition of irrelevant information, problem solving, planning efficiency, generative fluency and self-monitoring) compared to those bilinguals showing weaker language control abilities ('switchers"). Methods: 29 late bilinguals (21 women) were evaluated using various cognitive control neuropsychological tests [e.g., Tower of Hanoi, Ruff Figural Fluency Task, Divided Attention, Go/noGo] tapping executive functions as well as four subtests of the Wechsler Adult Intelligence Scale. The analysis involved t-tests (two independent samples). Non-switchers (n = 16) were distinguished from switchers (n = 13) by their performance observed in a bilingual picture-naming task. Results: The non-switcher group demonstrated a better performance on the Tower of Hanoi and Ruff Figural Fluency task, faster reaction time in a Go/noGo and Divided Attention task, and produced significantly fewer errors in the Tower of Hanoi, Go/noGo, and Divided Attention tasks when compared to the switchers. Non-switchers performed significantly better on two verbal subtests of the Wechsler Adult Intelligence Scale (Information and Similarity), but not on the Performance subtests (Picture Completion, Block Design). Conclusions: The present results suggest that bilinguals with stronger language control have indeed a cognitive advantage in the administered tests involving executive functions, in particular inhibition, self-monitoring, problem solving, and generative fluency, and in two of the intelligence tests. What remains unclear is the direction of the relationship between executive functions and language control abilities.

Executive functions profile in extreme eating/weight conditions: from anorexia nervosa to obesity

Extreme weight conditions (EWC) groups along a continuum may share some biological risk factors and intermediate neurocognitive phenotypes. A core cognitive trait in EWC appears to be executive dysfunction, with a focus on decision making, response inhibition and cognitive flexibility. Differences between individuals in these areas are likely to contribute to the differences in vulnerability to EWC. The aim of the study was to investigate whether there is a common pattern of executive dysfunction in EWC while comparing anorexia nervosa patients (AN), obese subjects (OB) and healthy eating/weight controls (HC).

Executive dysfunction and memory impairment in schizoaffective disorder: a comparison with bipolar disorder, schizophrenia and healthy controls.

BACKGROUND: Deficits in memory and executive performance are well-established features of bipolar disorder and schizophrenia. By contrast, data on cognitive impairment in schizoaffective disorder are scarce and the findings are conflicting. METHOD: We used the Wechsler Memory Scale (WMS-III) and the Behavioural Assessment of the Dysexecutive Syndrome (BADS) to test memory and executive function in 45 schizophrenic patients, 26 schizomanic patients and 51 manic bipolar patients in comparison to 65 healthy controls. The patients were tested when acutely ill. RESULTS: All three patient groups performed significantly more poorly than the controls on global measures of memory and executive functioning, but there were no differences among the patient groups. There were few differences in memory and executive function subtest scores within the patient groups. There were no differences in any test scores between manic patients with and without psychotic symptoms. CONCLUSIONS: Schizophrenic, schizomanic and manic patients show a broadly similar degree of executive and memory deficits in the acute phase of illness. Our results do not support a categorical differentiation across different psychotic categories with regard to neuropsychological deficits.

Individual differences in control of language interference in late bilinguals are mainly related to general executive abilities

Background: Recent research based on comparisons between bilinguals and monolinguals postulates that bilingualism enhances cognitive control functions, because the parallel activation of languages necessitates control of interference. In a novel approach we investigated two groups of bilinguals, distinguished by their susceptibility to cross-language interference, asking whether bilinguals with strong language control abilities ('non-switchers") have an advantage in executive functions (inhibition of irrelevant information, problem solving, planning efficiency, generative fluency and self-monitoring) compared to those bilinguals showing weaker language control abilities ('switchers"). Methods: 29 late bilinguals (21 women) were evaluated using various cognitive control neuropsychological tests [e.g., Tower of Hanoi, Ruff Figural Fluency Task, Divided Attention, Go/noGo] tapping executive functions as well as four subtests of the Wechsler Adult Intelligence Scale. The analysis involved t-tests (two independent samples). Non-switchers (n = 16) were distinguished from switchers (n = 13) by their performance observed in a bilingual picture-naming task. Results: The non-switcher group demonstrated a better performance on the Tower of Hanoi and Ruff Figural Fluency task, faster reaction time in a Go/noGo and Divided Attention task, and produced significantly fewer errors in the Tower of Hanoi, Go/noGo, and Divided Attention tasks when compared to the switchers. Non-switchers performed significantly better on two verbal subtests of the Wechsler Adult Intelligence Scale (Information and Similarity), but not on the Performance subtests (Picture Completion, Block Design). Conclusions: The present results suggest that bilinguals with stronger language control have indeed a cognitive advantage in the administered tests involving executive functions, in particular inhibition, self-monitoring, problem solving, and generative fluency, and in two of the intelligence tests. What remains unclear is the direction of the relationship between executive functions and language control abilities.