Essays on behavioral aspects of the design and disclosure of compensation contracts

This thesis consists of four essays on the design and disclosure of compensation contracts. Essays 1, 2 and 3 focus on behavioral aspects of mandatory compensation disclosure rules and of contract negotiations in agency relationships. The three experimental studies develop psychology- based theory and present results that deviate from standard economic predictions. Furthermore, the results of Essay 1 and 2 also have implications for firms’ discretion in how to communicate their top management’s incentives to the capital market. Essay 4 analyzes the role of fairness perceptions for the evaluation of executive compensation. For this purpose, two surveys targeting representative eligible voters as well as investment professionals were conducted. Essay 1 investigates the role of the detailed ‘Compensation Discussion and Analysis’, which is part of the Security and Exchange Commission’s 2006 regulation, on investors’ evaluations of executive performance. Compensation disclosure complying with this regulation clarifies the relationship between realized reported compensation and the underlying performance measures and their target achievement levels. The experimental findings suggest that the salient presentation of executives’ incentives inherent in the ‘Compensation Discussion and Analysis’ makes investors’ performance evaluations less outcome dependent. Therefore, investors’ judgment and investment decisions might be less affected by noisy environmental factors that drive financial performance. The results also suggest that fairness perceptions of compensation contracts are essential for investors’ performance evaluations in that more transparent disclosure increases the perceived fairness of compensation and the performance evaluation of managers who are not responsible for a bad financial performance. These results have important practical implications as firms might choose to communicate their top management’s incentive compensation more transparently in order to benefit from less volatile expectations about their future performance. Similar to the first experiment, the experiment described in Essay 2 addresses the question of more transparent compensation disclosure. However, other than the first experiment, the second experiment does not analyze the effect of a more salient presentation of contract information but the informational effect of contract information itself. For this purpose, the experiment tests two conditions in which the assessment of the compensation contracts’ incentive compatibility, which determines executive effort, is either possible or not. On the one hand, the results suggest that the quality of investors’ expectations about executive effort is improved, but on the other hand investors might over-adjust their prior expectations about executive effort if being confronted with an unexpected financial performance and under-adjust if the financial performance confirms their prior expectations. Therefore, in the experiment, more transparent compensation disclosure does not lead to more correct overall judgments of executive effort and to even lower processing quality of outcome information. These results add to the literature on disclosure which predominantly advocates more transparency. The findings of the experiment however, identify decreased information processing quality as a relevant disclosure cost category. Firms might therefore carefully evaluate the additional costs and benefits of more transparent compensation disclosure. Together with the results from the experiment in Essay 1, the two experiments on compensation disclosure imply that firms should rather focus on their discretion how to present their compensation disclosure to benefit from investors’ improved fairness perceptions and their spill-over on performance evaluation. Essay 3 studies the behavioral effects of contextual factors in recruitment processes that do not affect the employer’s or the applicant’s bargaining power from a standard economic perspective. In particular, the experiment studies two common characteristics of recruitment processes: Pre-contractual competition among job applicants and job applicants’ non-binding effort announcements as they might be made during job interviews. Despite the standard economic irrelevance of these factors, the experiment develops theory regarding the behavioral effects on employees’ subsequent effort provision and the employers’ contract design choices. The experimental findings largely support the predictions. More specifically, the results suggest that firms can benefit from increased effort and, therefore, may generate higher profits. Further, firms may seize a larger share of the employment relationship’s profit by highlighting the competitive aspects of the recruitment process and by requiring applicants to make announcements about their future effort. Finally, Essay 4 studies the role of fairness perceptions for the public evaluation of executive compensation. Although economic criteria for the design of incentive compensation generally do not make restrictive recommendations with regard to the amount of compensation, fairness perceptions might be relevant from the perspective of firms and standard setters. This is because behavioral theory has identified fairness as an important determinant of individuals’ judgment and decisions. However, although fairness concerns about executive compensation are often stated in the popular media and even in the literature, evidence on the meaning of fairness in the context of executive compensation is scarce and ambiguous. In order to inform practitioners and standard setters whether fairness concerns are exclusive to non-professionals or relevant for investment professionals as well, the two surveys presented in Essay 4 aim to find commonalities in the opinions of representative eligible voters and investments professionals. The results suggest that fairness is an important criterion for both groups. Especially, exposure to risk in the form of the variable compensation share is an important criterion shared by both groups. The higher the assumed variable share, the higher is the compensation amount to be perceived as fair. However, to a large extent, opinions on executive compensation depend on personality characteristics, and to some extent, investment professionals’ perceptions deviate systematically from those of non-professionals. The findings imply that firms might benefit from emphasizing the riskiness of their managers’ variable pay components and, therefore, the findings are also in line with those of Essay 1.

An evaluation of a behavioral change intervention for smokeless tobacco use

During the last three decades considerable attention has been placed on the reduction of tobacco use due to cigarette smoking. During this time, studies have been funded and programs have been developed that focus on both prevention and cessation of cigarette smoking. This intense focus has led to a significant decline in cigarette smoking. But now, use of another form of tobacco--smokeless tobacco--is gaining in popularity.^ In 1989, the National Cancer Institute funded a research study at The University of Texas M. D. Anderson Cancer Center, called Working Well, to develop, implement, and evaluate worksite health promotion programs aimed at reducing cancer risks. As part of this program, a behavioral intervention for smokeless tobacco use was developed. This dissertation evaluates the impact of that behavioral change intervention for smokeless tobacco use.^ Data collected during the Working Well program were analyzed to determine the effect of the intervention. The primary outcomes analyzed were smokeless tobacco cessation, stages of change movement, and prevalence. The secondary outcomes analyzed included the prediction of smokeless tobacco use, stage movement, and cessation. Primary outcome analyses were conducted using the worksite as the unit of analysis, while the secondary analyses were conducted using the individual as the unit of analysis.^ Approximately 20% of the male population used smokeless tobacco. Results of intervention analyses indicate that the Working Well program produced no intervention effect on any of the primary outcomes. At the final observation, the experimental worksites achieved a quit rate of 27%, while the control worksites achieved a quit rate of 26% (P = 0.78). Stage movement for the experimental worksites was 49%, while the control worksites experienced stage movement of 43% (P = 0.20). The results of the analyses on smokeless tobacco prevalence followed the same pattern. Predictors of smokeless tobacco use, cessation, and stage movement were also identified.^ Based on the results found in this study, smokeless tobacco should remain a research priority. Future research should focus on smokeless tobacco use, including the identification of the determinants of smokeless tobacco use and the development of measures and effective intervention strategies. ^

Exploring How AFFECT (A Family Focused Emotion Communication Training) and Self Psychology Are Mutually Enhancing

This paper implicitly advocates for a rapprochement between psychodynamic and behavioral approaches to psychotherapy, by exploring the similarities and differences between self psychology and A Family Focused Emotion Communication Training (AFFECT), a behavioral parent training model. Self psychology, a theory with broad applicability, has been applied to several modalities besides behavioral ones. Generally speaking, self psychology and AFFECT are both relational approaches to psychotherapy that emphasize the impact of parent responsiveness, more specifically empathic attunement, on a child's emotional development and emotion regulation. Differentiating aspects of each model are identified to enhance the other model. AFFECT has relevance for pushing self psychology theory more in the direction of operations, which has implications for enhancing the research potential of self psychology, as well as for the training of the self-psychologist. Conversely, self psychology has relevance for coaching the parent with low self-esteem and decreased self-efficacy in AFFECT, which has potential implications for AFFECT treatment outcomes.

Philosophy and psychology pamphlets

A collection of miscellaneous pamphlets.

A metacognitive contextual intervention to enhance error awareness and functional outcome following traumatic brain injury: A single-case experimental design

Very few empirically validated interventions for improving metacognitive skills (i.e., self-awareness and self-regulation) and functional outcomes have been reported. This single-case experimental study presents JM, a 36-year-old man with a very severe traumatic brain injury (TBI) who demonstrated long-term awareness deficits. Treatment at four years post-injury involved a metacognitive contextual intervention based on a conceptualization of neuro-cognitive, psychological, and socio-environmental factors contributing to his awareness deficits. The 16-week intervention targeted error awareness and self-correction in two real life settings: (a) cooking at home: and (b) volunteer work. Outcome measures included behavioral observation of error behavior and standardized awareness measures. Relative to baseline performance in the cooking setting, JM demonstrated a 44% reduction in error frequency and increased self-correction. Although no spontaneous generalization was evident in the volunteer work setting, specific training in this environment led to a 39% decrease in errors. JM later gained paid employment and received brief metacognitive training in his work environment. JM's global self-knowledge of deficits assessed by self-report was unchanged after the program. Overall, the study provides preliminary support for a metacognitive contextual approach to improve error awareness and functional Outcome in real life settings.

Parapsychology on the couch: The psychology of occult belief in Germany, c. 1870-1939

This article considers the attempts of academic psychologists and critical occultists in Germany during the late nineteenth and early twentieth centuries to construct a psychology of occult belief. While they claimed that the purpose of this new subdiscipline was to help evaluate the work of occult researchers, the emergence of a psychology of occult belief in Germany served primarily to pathologize parapsychology and its practitioners. Not to be outdone, however, parapsychologists argued that their adversaries suffered from a morbid inability to accept the reality of the paranormal. Unable to resolve through experimental means the dispute over who should be allowed to mold the public's understanding of the occult, both sides resorted to defaming their opponent. (c) 2006 Wiley Periodicals, Inc.

Majority versus minority influence and prediction of behavioral intentions and behavior

Two experiments examined the effects of majority and minority influence on attitude-consistent behavioral intentions. In the first experiment, when attitudes were changed via minority influence there was a greater likelihood to engage in an attitude-consistent behavioral intention than when attitudes were changed via majority influence. This suggests that minority influence leads to stronger attitudes (based on systematic processing) that are more predictive of behavioral intentions, while attitude change via majority influence is due to compliance through non-systematic processing. Further support for this interpretation comes from the finding that the amount of message-congruent elaboration mediated behavioral intention. When there was no attitude change, there was no impact on behavioral intention to engage in an attitude-consistent behavior. Experiment 2 explored the role of personal relevance of the topic and also included a real behavioral measure. When the topic was of low personal relevance, the same pattern was found as Experiment 1. When the topic was of high personal relevance, thus increasing the motivation to engage in systematic processing, attitudes changed by both a majority and minority source increased behavioral intention and actual behavior. The results are consistent with the view that both majorities and minorities can lead to different processes and consequences under different situations. © 2006 Elsevier Inc. All rights reserved.

Determinants and Implications of Self-perceived Authenticity: Beliefs About Authenticity and Reactions to Behavioral Incongruence

Although many perspectives suggest that authenticity is important for well-being, people do not always have direct access to the psychological processes that produce their behaviors and, thus, are not able to judge whether they are behaving consistently with their personality, attitudes, values, motives, and goals. Even so, people experience subjective feelings of authenticity and inauthenticity, raising the question of factors that influence people’s judgments of whether they are being authentic. The present studies used descriptive, correlational, experimental, and experience sampling designs to examine possible influences on self-judgments of authenticity, including the congruence between people’s behavior and inner dispositions, the positivity of the behavior, their personal beliefs about authenticity, features of the interaction, and trait authenticity. Studies 1A and 1B examined the role of people’s beliefs about authenticity in self-judgments of authenticity. Studies 2A and 2B investigated the criteria that people use to judge their behavior as authentic versus inauthentic and challenged those criteria to see whether self-perceived authenticity was affected. And, Study 3 used an experience sampling design to study people’s experiences of state authenticity in daily life. Together the studies offer insights into the determinants of self-perceived authenticity and show that many factors that influence people’s feelings of authenticity are peripheral, if not irrelevant, to actual authenticity.

Integrating Mindfulness into Positive Psychology: a Randomised Controlled Trial of an Online Positive Mindfulness Program

The purpose of the present study was to test the efficacy of an 8-week online intervention-based Positive Mindfulness Program (PMP) that integrated mindfulness with a series of positive psychology variables, with a view to improving wellbeing scores measured in these variables. The positive mindfulness cycle, based on positive intentions and savouring, provides the theoretical foundation for the PMP. The study was based on a randomised wait-list controlled trial; and 168 participants (128 females, mean age = 40.82) completed the intervention which included daily videos, meditations, and activities. The variables tested included wellbeing measures, such as gratitude, self-compassion, self-efficacy, meaning, and autonomy. Pre- and post- intervention data, including one month after the end of the intervention, were collected from both experimental and control groups. The post-test measurements of the experimental participants showed a significant improvement in all the dependent variables compared with the pre-test ones and were also significantly higher than those of the control group. One month after the intervention, the experimental group participants retained their improvement in 10 out of the 11 measurements. These positive results indicate that PMP may be effective in enhancing wellbeing and other positive variables in adult, non-clinical populations.

Cognitive-behavioral group therapy for girls victims of sexual violence in Brazil: Are there differences in effectiveness when applied by different groups of psychologists?: effectiveness of group therapy for girls victims of sexual violence

The effectiveness of a cognitive-behavioral group therapy model for the treatment of girls victims of sexual violence (SV) was investigated when applied by different groups of practitioners: researchers/psychologists who developed it (G1) and psychologists from the public social care network trained by the first group (G2). A quasi-experimental study was carried out, in which the group therapy model was applied by the two groups. A total of 103 girls victims of sexual violence (SV), aged between seven and 16 years (M=11.76 years, SD=2.02 years) were included, with 49 attended by G1, and 54 by G2. The results indicated a significant reduction in the symptoms of depression, anxiety, stress, and PTSD. The comparison between the results obtained by the two groups of practitioners in the application of the model indicated no significant differences in the rates of improvement of the participants. These results indicate the effectiveness of the cognitive-behavioral group therapy model evaluated and the possibility of it being used as a care strategy by psychology practitioners working in public services.

Gender, Behavioral Assessment of Negative Reinforcement Driven Risk Taking Propensity, and Cigarette Smoking

Cigarette smoking remains the leading preventable cause of death and disability in the United States and most often is initiated during adolescence. An emerging body of research suggests that a negative reinforcement model may explain factors that contribute to tobacco use during adolescence and that negative reinforcement processes may contribute to tobacco use to a greater extent among female adolescents than among male adolescents. However, the extant literature both on the relationship between negative reinforcement processes and adolescent tobacco use as well as on the relationship between gender, negative reinforcement processes, and adolescent tobacco use is limited by the sole reliance on self-report measures of negative reinforcement processes that may contribute to cigarette smoking. The current study aimed to further disentangle the relationships between negative reinforcement based risk taking, gender and tobacco use during older adolescence by utilizing a behavioral analogue measure of negative reinforcement based risk taking, the Maryland Resource for the Behavioral Utilization of the Reinforcement of Negative Stimuli (MRBURNS). Specifically, we examined the relationship between pumps on the MRBURNS, an indicator of risk taking, and smoking status as well as the interaction between MRBURNS pumps and gender for predicting smoking status. Participants included 103 older adolescents (n=51 smokers, 50.5% female, Age (M(SD) = 19.41(1.06)) who all attended one experimental session during which they completed the MRBURNS as well as self-report measures of tobacco use, nicotine dependence, alcohol use, depression, and anxiety. We utilized binary logistic regressions to examine the relationship between MRBURNS pumps and smoking status as well as the interactive effect of MRBURNS pumps and gender for predicting smoking status. Controlling for relevant covariates, pumps on the MRBURNS did not significantly predict smoking status and the interaction between pumps on the MRBURNS and gender also did not significantly predict smoking status. These findings highlight the importance of future research examining various task modifications to the MRBURNS as well as the need for replications of this study with larger, more diverse samples.