LAUSR

Abstract In this paper, we investigate the impact of anticipated regret on the decision of incentive systems and discuss the three groups respectively according to the confidence degrees on the basis of non-parametric test and empirical method. Qualitatively, we find that the choice of incentive systems is significantly different among the three groups and anticipated regret has significant impact on the decision of incentive systems. Quantitatively, we find that the higher “confidence degree” of the executives means greater tendency to choose incentive system related to firm performance, and we also use model to investigate the relationship between anticipated regret and shares of incentive system. We find that the two directions’ anticipated regret has the opposite effect on the decision. From the results of both experimental method and empirical method the hypotheses are verified.