Skip to Main content Skip to Navigation
Journal articles

Optimal Employee Ownership Contracts under Ambiguity Aversion

Abstract : The aim of this paper is to compute and describe the conditions of an optimal employee ownership contract between an employer and an ambiguity-averse employee. We then introduce ambiguity aversion in the baseline model of Aubert et al (2014) using the multiple prior preferences of Gilboa and Schmeidler (1989) and its extension proposed by Maccheroni et al (2006). This model offers solutions that reconcile labor and financial economics and behavioral economics research findings on employee ownership. The paper focuses on the most common situation where employee ownership has a positive impact on corporate performance, but can also be used as an entrenchment mechanism. We determine the optimal company stock contribution, which corresponds to a perfect subgame Nash equilibrium in the ambiguity framework. Using the framework of Gilboa and Schmeidler's (1989), we show that the optimal ownership contract is respectively increasing with respect to the lower bound of the return expectation in the case of a high level of effort, and decreasing with respect to the upper bound of the return expectation in the case of a low level of effort. In the framework of Maccheroni et al (2006), we prove that if aversion to ambiguity is sufficiently high, then we find the same behavior as in the case of no ambiguity.
Document type :
Journal articles
Complete list of metadatas

Cited literature [39 references]  Display  Hide  Download
Contributor : Nicolas Aubert <>
Submitted on : Wednesday, March 6, 2019 - 2:52:30 PM
Last modification on : Wednesday, December 2, 2020 - 3:42:47 AM
Long-term archiving on: : Friday, June 7, 2019 - 4:28:46 PM


AUBERT et al 2017.pdf
Files produced by the author(s)



Nicolas Aubert, Benameur Hachmi, Guillaume Garnotel, Jean-Luc Prigent. Optimal Employee Ownership Contracts under Ambiguity Aversion. Economic Inquiry, Wiley, 2018, 56 (1), pp.238-251. ⟨10.1111/ecin.12478⟩. ⟨halshs-01492391⟩



Record views


Files downloads