In 2010, the United Kingdom’s Ministry of Justice entered into an agreement with a nonprofit known as Social Finance to prevent reoffending by juvenile offenders released from prison in Peterborough, England. What made this contract unique is that the government payments to Social Finance were not based on delivery of services but instead on the level of government cost aversion from reduced re...

Monte-Carlo Tree Search is a best-first search technique based on simulations to sample the state space of a decision-making problem. In games, positions are evaluated based on estimates obtained from rewards of numerous randomized play-outs. Generally, rewards from play-outs are discrete values representing the outcome of the game (loss, draw, or win), e.g., r ∈ {−1, 0, 1}, which are backpropa...

Management compensation packages typically include some form of bonus payment; these payments shall provide incentives for effort, but recently they were heavily criticized for their perceived excessive risk-taking incentives. This paper presents a continuous-time model in which the manager decides on the risk and effort level of the bank. A single-period model is nested into continuous-time; f...

Medial temporal lobe (MTL) dependent long-term memory for novel events is modulated by a circuitry that also responds to reward and includes the ventral striatum, dopaminergic midbrain, and medial orbitofrontal cortex (mOFC). This common neural network may reflect a functional link between novelty and reward whereby novelty motivates exploration in the search for rewards; a link also termed nov...

Understanding the mechanisms of memory formation is fundamental to establishing optimal educational practices and restoring cognitive function in brain disease. Here, we show for the first time in a non-primate species, that spatial learning receives a special bonus from self-directed exploration. In contrast, when exploration is escape-oriented, or when the full repertoire of exploratory behav...

The paper analyzes one of the most common life insurance products the so-called participariflg (or with pro@) policy. This type of contract stands in contrast to UnitLinked (UL) products in that interest is credited to the policy periodically according to some mechanism which smoothes past returns on the life insurance company’s (LIC) assets. As is the case for UL products, the participating po...

Subjective Evaluations: Discretionary Bonuses and Feedback Credibility We provide a new rationale for the use of discretionary bonuses. In a setting with unknown match qualities between a worker and a firm and subjective evaluations by the principal, bonuses are useful in order to make the feedback from the firm to the workers credible. This way workers in good matches are less inclined to acce...

Tournaments have been objected as resulting from ad hoc restrictions to the contracting problem which are not easily justified. Taking into account that a performance measure might not be verifiable to a third party, however, a restriction to payments which sum up to a constant may be reasonable. The paper analyzes such fixed payment schemes with regard to their optimality and the relation to t...

In some companies, corrective maintenance is conducted in-house but preventive maintenance might be outsourced. This raises a need to optimise some parameters such as the number of contracts from a perspective of the equipment owner. This paper considers a maintenance policy for such a situation, analyses the roles of the parameters in a PM model, proposes approaches to defining bonus functions...

Our evidence on the stock price reaction to the announcement of short-term executive compensation plan adoption indicates that: (1) significantly positive abnormal returns occur in the month of announcement and in the four months before the bonus plan adoption, and (2) significantly positive abnormal returns occur 10 months after the adoption announcement, returns that are associated with posit...