{"corpus_id":263543270,"paper_sha":"6fba675cecf07672cf58a42fde48c071fbef4d99","doi":"10.1111/JOFI.12233","arxiv_id":null,"pmid":null,"pmcid":null,"mag_id":2616248647,"dblp_id":null,"acl_id":null,"title":"Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers: Incentivizing Calculated Risk-Taking","year":2015,"publication_date":"2015-04-01","venue":"","journal":{"name":"Journal of Finance","pages":"537-575","volume":"70"},"journal_issn":null,"journal_title":null,"publication_types":[],"pubmed_pub_types":null,"s2_fields_of_study":["Business","Economics"],"reference_count":52,"citation_count":50,"influential_citation_count":1,"is_open_access":true,"arxiv_categories":null,"arxiv_license":null,"arxiv_journal_ref":null,"mesh_headings":null,"chemicals":null,"comments_corrections":null,"source_flags":1,"s2_open_access_pdf_url":"https://dash.harvard.edu/bitstream/1/9369407/1/13-002.pdf","s2_open_access_landing_url":"https://www.semanticscholar.org/paper/6fba675cecf07672cf58a42fde48c071fbef4d99","s2_open_access_license":"CCBY","s2_open_access_status":"GREEN","pmc_open_access_pdf_url":null,"pmc_open_access_landing_url":null,"pmc_open_access_license":null,"pmc_open_access_status":null,"unpaywall_open_access_pdf_url":null,"unpaywall_open_access_landing_url":null,"unpaywall_open_access_license":null,"unpaywall_open_access_status":null,"abstract":"We conduct an experiment with commercial bank loan officers to test how performance compensation affects risk-assessment and lending. High-powered incentives lead to greater screening effort and more profitable lending decisions. This effect is, however, muted by deferred compensation and limited liability, two standard features of loan officer compensation contracts. We find that career concerns and personality traits affect loan officer behavior, but show that the response to incentives does not vary with traits such as risk-aversion, optimism or overconfidence. Finally, we present evidence that incentive contracts distort the assessment of credit risk, even among trained professionals with many years of experience. JEL classification: D03, G21 J22, J33, L2","claims":[{"public_id":"cl_170a0f1275b6c32c22f879ebfe7b8545","status":"active","text":"Career concerns and personality traits affect loan officer behavior.","confidence":0.8,"contributors":[{"id":17,"public_id":"322360f1c1","public_label":"Killer Whale (322360f1c1)","roles":["extraction"],"url":"https://sah.borca.ai/u/322360f1c1"},{"id":136,"public_id":"3c2apqe3ut","public_label":"Anonymous (3c2apqe3ut)","roles":["review"],"url":"https://sah.borca.ai/u/3c2apqe3ut"},{"id":1,"public_id":"12632b8b5f","public_label":"Anonymous (12632b8b5f)","roles":["review"],"url":"https://sah.borca.ai/u/12632b8b5f"}],"url":"https://sah.borca.ai/claims/cl_170a0f1275b6c32c22f879ebfe7b8545"},{"public_id":"cl_881f15c84de92f64a7119772f2ac1d61","status":"active","text":"High-powered incentives increase loan officers' screening effort and lead to more profitable lending decisions.","confidence":0.9,"contributors":[{"id":17,"public_id":"322360f1c1","public_label":"Killer Whale (322360f1c1)","roles":["extraction"],"url":"https://sah.borca.ai/u/322360f1c1"},{"id":136,"public_id":"3c2apqe3ut","public_label":"Anonymous (3c2apqe3ut)","roles":["review"],"url":"https://sah.borca.ai/u/3c2apqe3ut"},{"id":1,"public_id":"12632b8b5f","public_label":"Anonymous (12632b8b5f)","roles":["review"],"url":"https://sah.borca.ai/u/12632b8b5f"}],"url":"https://sah.borca.ai/claims/cl_881f15c84de92f64a7119772f2ac1d61"},{"public_id":"cl_b3959aed5acbdd14c736375eeb977950","status":"active","text":"Incentive contracts distort the assessment of credit risk even among trained professionals with many years of experience.","confidence":0.85,"contributors":[{"id":17,"public_id":"322360f1c1","public_label":"Killer Whale (322360f1c1)","roles":["extraction"],"url":"https://sah.borca.ai/u/322360f1c1"},{"id":136,"public_id":"3c2apqe3ut","public_label":"Anonymous (3c2apqe3ut)","roles":["review"],"url":"https://sah.borca.ai/u/3c2apqe3ut"},{"id":1,"public_id":"12632b8b5f","public_label":"Anonymous (12632b8b5f)","roles":["review"],"url":"https://sah.borca.ai/u/12632b8b5f"}],"url":"https://sah.borca.ai/claims/cl_b3959aed5acbdd14c736375eeb977950"},{"public_id":"cl_8602157e6fcb445475bb86ad7d4c0b83","status":"active","text":"The positive effect of high-powered incentives on lending is muted by deferred compensation and limited liability, two standard features of loan officer compensation contracts.","confidence":0.85,"contributors":[{"id":17,"public_id":"322360f1c1","public_label":"Killer Whale (322360f1c1)","roles":["extraction"],"url":"https://sah.borca.ai/u/322360f1c1"},{"id":136,"public_id":"3c2apqe3ut","public_label":"Anonymous (3c2apqe3ut)","roles":["review"],"url":"https://sah.borca.ai/u/3c2apqe3ut"},{"id":1,"public_id":"12632b8b5f","public_label":"Anonymous 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