Incentive Research on Asymmetric Overconfident Fund Managers Under Flexible Risk Constraints
This paper introduces investment return risk constraint into fund man-ager compensation contract,and studies the incentive problem of asymmetric over-confident fund manager under flexible risk constraint.Research shows that managers'overconfidence can boost their own efforts and push up the proportion of funds in-vested in risky assets.The marginal cost and effort level of managers with flexible risk constraints are smaller than those without risk constraints.Profit sharing ratio and risk flexibility constraint coefficient must meet certain conditions,so that linear contracts can motivate managers to make efforts.Principals'overconfidence posi-tively affects the ratio of revenue sharing,thus promoting managers'efforts,while moderate principals'overconfidence negatively affects the risk constraint coefficient of revenue,thus promoting managers'efforts.Therefore,the moderate overconfidence of the principal is conducive to motivating the efforts of the manager.The clients'level of overconfidence should not be too high.
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