Endogenous managerial compensation contracts in experimental quantity-setting duopolies

Given the ongoing debate on managerial compensation schemes, our paper offers empirical insights on the strategic choice of firms' owners over the terms of a managerial compensation contract, as a commitment device aiming at gaining competitive advantage in the product market. In a quantity setting duopoly we experimentally test whether firms' owners compensate their managers through contracts combining own profits either with revenues or with relative performance, and the resulting managerial behaviour in the product market. Prominent among our results is that firms' owners choose relative performance over profit revenue contracts more frequently. Further, firms' owners successfully induce a more aggressive behaviour by their managers in the market, by setting incentives which deviate from strict profit maximization.

Management compensation systems in MNCs and domestic firms. Cross-national empirical evidence

• This is a study of the relationship between institutional settings and managerial compensation systems, based on extensive cross-national survey evidence. • We compare differences in practices between Multinational Corporations (MNCs) and domestic firms across a range of capitalist archetypes. • We find that MNCs are more likely to promote compensation systems that incentivise managers in line with organisational performance compared to domestic firms. Our findings also reveal persistent diversity reflecting firm type and institutional setting. We find that the gap between MNCs and domestic firms in terms of the usage of incentive-related compensation is less pronounced in Liberal Market Economies than in other settings. This suggests that it is a combination of being an MNC and the specific home locale that moulds approaches to managerial compensation. This reflects considerable hybridisation of practices within and between settings.

Bjerknes compensation and the decadal variability of the energy transports in a coupled climate model

In the 1960s, Jacob Bjerknes suggested that if the top-of-the-atmosphere (TOA) fluxes and the oceanic heat storage did not vary too much, then the total energy transport by the climate system would not vary too much either. This implies that any large anomalies of oceanic and atmospheric energy transport should be equal and opposite. This simple scenario has become known as Bjerknes compensation. A long control run of the Third Hadley Centre Coupled Ocean-Atmosphere General Circulation Model (HadCM3) has been investigated. It was found that northern extratropical decadal anomalies of atmospheric and oceanic energy transports are significantly anticorrelated and have similar magnitudes, which is consistent with the predictions of Bjerknes compensation. ne degree of compensation in the northern extratropics was found to increase with increasing, time scale. Bjerknes compensation did not occur in the Tropics, primarily as large changes in the surface fluxes were associated with large changes in the TOA fluxes. In the ocean, the decadal variability of the energy transport is associated with fluctuations in the meridional overturning circulation in the Atlantic Ocean. A stronger Atlantic Ocean energy transport leads to strong warming of surface temperatures in the Greenland-Iceland-Norwegian (GIN) Seas. which results in a reduced equator-to-pole surface temperature gradient and reduced atmospheric baroclinicity. It is argued that a stronger Atlantic Ocean energy transport leads to a weakened atmospheric transient energy transport.

Noise, predation risk compensation and vigilance in the chaffinch Fringilla coelebs

Background noise should in theory hinder detection of auditory cues associated with approaching danger. We tested whether foraging chaffinches Fringilla coelebs responded to background noise by increasing vigilance, and examined whether this was explained by predation risk compensation or by a novel stimulus hypothesis. The former predicts that only inter-scan interval should be modified in the presence of background noise, not vigilance levels generally. This is because noise hampers auditory cue detection and increases perceived predation risk primarily when in the head-down position, and also because previous tests have shown that only interscan interval is correlated with predator detection ability in this system. Chaffinches only modified interscan interval supporting this hypothesis. At the same time they made significantly fewer pecks when feeding during the background noise treatment and so the increased vigilance led to a reduction in intake rate, suggesting that compensating for the increased predation risk could indirectly lead to a fitness cost. Finally, the novel stimulus hypothesis predicts that chaffinches should habituate to the noise, which did not occur within a trial or over 5 subsequent trials. We conclude that auditory cues may be an important component of the trade-off between vigilance and feeding, and discuss possible implications for anti-predation theory and ecological processes

Steady-spectrum contexts and perceptual compensation for reverberation in speech identification

Perceptual compensation for reverberation was measured by embedding test words in contexts that were either spoken phrases or processed versions of this speech. The processing gave steady-spectrum contexts with no changes in the shape of the short-term spectral envelope over time, but with fluctuations in the temporal envelope. Test words were from a continuum between "sir" and "stir." When the amount of reverberation in test words was increased, to a level above the amount in the context, they sounded more like "sir." However, when the amount of reverberation in the context was also increased, to the level present in the test word, there was perceptual compensation in some conditions so that test words sounded more like "stir" again. Experiments here found compensation with speech contexts and with some steady-spectrum contexts, indicating that fluctuations in the context's temporal envelope can be sufficient for compensation. Other results suggest that the effectiveness of speech contexts is partly due to the narrow-band "frequency-channels" of the auditory periphery, where temporal-envelope fluctuations can be more pronounced than they are in the sound's broadband temporal envelope. Further results indicate that for compensation to influence speech, the context needs to be in a broad range of frequency channels. (c) 2007 Acoustical Society of America.

Perceptual compensation for reverberation in speech identification: effects of single-band, multiple-band and wideband noise contexts

Perceptual effects of room reverberation on a "sir" or "stir" test-word can be observed when the level of reverberation in the word is increased, while the reverberation in a surrounding 'context I utterance remains at a minimal level. The result is that listeners make more "sit" identifications. When the context's reverberation is also increased, to approach the level in the test word, extrinsic perceptual compensation is observed, so that the number of listeners' "sir" identifications reduces to a value similar to that found with minimal reverberation. Thus far, compensation effects have only been observed with speech or speech-like contexts in which the short-term spectrum changes as the speaker's articulators move. The results reported here show that some noise contexts with static short-term spectra can also give rise to compensation. From these experiments it would appear that compensation requires a context with a temporal envelope that fluctuates to some extent, so that parts of it resemble offsets. These findings are consistent with a rather general kind of perceptual compensation mechanism; one that is informed by the 'tails' that reverberation adds at offsets. Other results reported here show that narrow-band contexts do not bring about compensation, even when their temporal-envelopes are the same as those of the more effective wideband contexts. These results suggest that compensation is confined to the frequency range occupied by the context, and that in a wideband sound it might operate in a 'band by band' manner.

Perceptual compensation for effects of reverberation in speech identification

Listeners were asked to identify modified recordings of the words "sir" and "stir," which were spoken by an adult male British-English speaker. Steps along a continuum between the words were obtained by a pointwise interpolation of their temporal-envelopes. These test words were embedded in a longer "context" utterance, and played with different amounts of reverberation. Increasing only the test-word's reverberation shifts the listener's category boundary so that more "sir"-identifications are made. This effect reduces when the context's reverberation is also increased, indicating perceptual compensation that is informed by the context. Experiment I finds that compensation is more prominent in rapid speech, that it varies between rooms, that it is more prominent when the test-word's reverberation is high, and that it increases with the context's reverberation. Further experiments show that compensation persists when the room is switched between the context and the test word, when presentation is monaural, and when the context is reversed. However, compensation reduces when the context's reverberation pattern is reversed, as well as when noise-versions of the context are used. "Tails" that reverberation introduces at the ends of sounds and at spectral transitions may inform the compensation mechanism about the amount of reflected sound in the signal. (c) 2005 Acoustical Society of America.

Perceptual compensation for effects of echo and of reverberation on speech identification

In an ideal "reverberant" room, the energy of the impulse responses decays smoothly, at a constant rate of dB/s, so that gradually-decaying tails are added at the ends of sounds. Conversely, a single echo gives a flat energy-decay up to the echo's arrival time, which then drops abruptly, so that sounds with only echoes lack the decaying-tail feature of reverberation. The perceptual effects of these types of reflection pattern were measured with test-words from a continuum of steps between "sir" and "stir", which were each embedded in a carrier phrase. When the proportion of reflected sound in test-words is increased, to a level above the amount in the carrier, the test words sound more like "sir". However, when the proportion of reflected sound in the carrier is also increased, to match the amount in the test word, there can be a perceptual compensation where test words sound more like "stir" again. A reference condition used real-room reverberation from recordings at different source to receiver distances. In a synthetic-reverberation condition, the reflection pattern was from a "colorless" impulse response, comprising exponentially-decaying reflections that were spaced at intervals. In a synthetic-echo condition, the reflection pattern was obtained from the synthetic reverberation by removing the intervals between reflections before delaying the resulting cluster relative to the direct sound. Compensation occurred in the reference condition and in different types of synthetic reverberation, but not in synthetic-echo conditions. This result indicates that the presence of tails from reverberation informs the compensation mechanism.