The Negative Trade-off Between Risk and Incentives: Evidence from the American Whaling Industry

Eric Hilt

No 11960, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the trade-off between risk and incentives in the share contracts of the American whaling industry. Using a newly-collected panel of 5,378 individuals who sailed on whaling voyages from 1855-68, the response of sailors' compensation to an increase in risk is estimated. The risks used to identify this response resulted from the commerce-raiding naval vessels of the Confederacy during the Civil War. As the Confederate cruisers sailed primarily in the Atlantic, and therefore posed far less of a threat to whaling voyages to other oceans, a quasi-experimental approach, focussing on the differences between Atlantic voyages compared to others, is implemented. The results support the existence of a negative trade-off between risk and incentives in the industry's contracts. Moreover, evidence is found of selection among less risk-averse sailors and merchants into riskier voyages during the war.

JEL-codes: J3 L2 N5 (search for similar items in EconPapers)
Date: 2006-01
New Economics Papers: this item is included in nep-his
Note: DAE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Hilt, Eric. "Incentives In Corporations: Evidence From The American Whaling Industry," Journal of Law and Economics, 2006, v49(1,Apr), 197-227.
Published as Hilt, Eric, 2008. "The negative trade-off between risk and incentives: Evidence from the american whaling industry," Explorations in Economic History, Elsevier, vol. 45(4), pages 424-444, September.

Downloads: (external link)
http://www.nber.org/papers/w11960.pdf (application/pdf)

Related works:
Journal Article: The negative trade-off between risk and incentives: Evidence from the american whaling industry (2008)
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: https://EconPapers.repec.org/RePEc:nbr:nberwo:11960

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11960

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().