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Survey about compensation schemes and risk taking for fund
managers
Situation: You are a professional fund manager (you invest money
for others). The compensation for
your hard work depends on your contract as well as how much of
your own money you invest in the
fund you are managing.
There are two different financial products you can invest in and
each costs 10.000 .
A: This financial product has a 50 % chance of gaining in value
and reaching the value of 13.000 and
a 50 % chance of losing value and ending up at the value of
8.000 .
B: This financial product has a 50 % chance of gaining in value
and reaching the value of 11.500 and
a 50 % chance of losing value and ending up at the value of
9.500 .
13.000 11.500
A: 10.000 B: 10.000
8.000 9.500
Questions
The following numbers will show the profits/losses for you and
for the person whose money you are
investing for each financial product and for each equally likely
case.
Question 1: You only manage your own money and invest your
10.000 . Would you choose financial
product A or B?
Your Profit/Loss
AGood Case +3000
Bad Case -2000
BGood Case +1500
Bad Case -500
Question 2: The fund you are managing now contains of5.000 of
your own money and 5.000 of
someone elses money who gave it to you to invest. For this
service you receive 2 % of the other
persons money, namely 100 . Would you choose financial product A
or B?
Your Profit/Loss Others Profit/Loss
AGood Case +1600 +1400
Bad Case -900 -1100
BGood Case +850 +650
Bad Case -150 -350
Question 3: The fund you are now managing contains of1.000 of
your own money and 9.000 of
someone elses money. For this service you receive 2 % of the
other persons money, namely 180 .
Would you choose financial product A or B?
Your Profit/Loss Others Profit/Loss
AGood Case +480 +2520
Bad Case -20 -1980
BGood Case +330 +1170
Bad Case +130 -630
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Question 4: The fund you are now managing contains 10.000 of
someone elses money. For this
service you receive 2 % of the other persons money, namely 200 .
Would you choose financial
product A or B?
Your Profit/Loss Others Profit/Loss
A Good Case +200 +2800Bad Case +200 -2200
BGood Case +200 +1300
Bad Case +200 -700
Question 5: The fund you are managing now contains 10.000 of
someone elses money. For this
service you receive 2 % of the other persons money, namely 200
and in addition you receive 20
%of the profits you generate. Would you choose financial product
A or B?
Your Profit/Loss Others Profit/Loss
AGood Case +800 +2200
Bad Case +200 -2200
BGood Case +500 +1000
Bad Case +200 -700
Question 6: What is your gender?
Male
Female
Thank you very much for your participation.
