New: Killing Conscience: The Unintended Behavioral Consequences of 'Pay For Performance'

By Lynn Stout

Contemporary lawmakers and reformers often argue that ex ante incentive contracts providing for large material rewards are the best and possibly only way to motivate corporate executives and other employees to serve their firms’ interests. This Article offers a specific critique of the “pay for performance” approach. In particular, it explores why, for a variety of mutually-reinforcing reasons, workplaces that rely on ex ante incentive contracts suppress unselfish prosocial behavior (conscience) and promote selfishness and opportunism. The end result may be not more efficient employee behavior, but more uncooperative, unethical, and illegal employee behavior.

Lynn Stout Distinguished Professor of Corporate & Business Law
Photo of Lynn Stout

Contact Information

Cornell Law School
312 Myron Taylor Hall
Ithaca, NY 14853-4901

Phone: (607) 255-8431
Fax: (607) 255-7193


Carolyn Headlam
Cornell Law School
315 Myron Taylor Hall
Ithaca, NY 14853-4901

Professional Biography

Professor Stout is an internationally recognized expert in the fields of corporate governance, securities regulation, financial derivatives, law and economics, and moral behavior. She is the author of numerous articles and books on these topics and lectures widely. Her most recent book is The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations and the Public (Berrerr Koehler 2012), which was named 2012 Governance Book of the Year.

Professor Stout serves on the Board of Governors of the CFA Institute, on the Financial Research Advisory Committee to the U.S. Treasury, as a member of the Board of Advisors for the Aspen Institute’s Business & Society Program, as Executive Advisor to the Brookings Institution Project on Corporate Purpose, and as a Research Fellow for the Gruter Institute for Law and Behavioral Research.

She holds a B.A. summa cum laude and a Masters in Public Affairs from Princeton University and a J.D. from the Yale Law School.


B.A. Princeton, 1979
M.P.A. Princeton, 1982
J.D. Yale, 1982