Economics at your fingertips  

The CEO Arms Race

Natalia Gritsko, Valentina Kozlova (), William Neilson () and Bruno Wichmann ()

Southern Economic Journal, 2013, vol. 79, issue 3, 586-599

Abstract: This article constructs a game‐theoretic model in which high chief executive officer (CEO) pay emerges as the outcome of an arms race, with each firm hiring a highly paid CEO to protect its competitive position against rivals who also hire highly paid CEOs. For an arms race to emerge, highly paid CEOs must generate idiosyncratic, privately known internal effects on profit, and CEO pay disparities must also generate asymmetric profit differences from external effects beyond the simple differences in pay. If the distribution of internal effects satisfies a key uniformity condition, an arms race emerges as the only equilibrium of the game.

Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Southern Economic Journal from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2022-09-22
Handle: RePEc:wly:soecon:v:79:y:2013:i:3:p:586-599