[zdc1]

People who sell lottery tickets, on average, do better than those who buy them. The same applies to stock options. Which is why "bonus" options are fine, but "buying" them by taking ESOP over potential salary, can be a bad choice.

[xphos]

I think it depends on the ESOP, the companies i've worked at ESOP happened at 10-15% discount of the real price at the buy time and those stocks are instantly sellable. They can be taxed differently yeah but depending on how much you are buying and sell its capital gains tax which can be lower than income tax.

Edit: I am conflating RSUs and stock options never worked somewhere without RSUs so there might be a gap in my experience

[slavik81]

Options are a bit riskier than RSUs. If you have RSUs issued at $100 and the stock goes down to $50, then your RSUs are worth half. If you have the option to buy stock at $100 and the stock goes down to $50, then that option is worthless.

[chermi]

What behavioral incentive do lotto tickets give the buyer? Options/stock work for both parties because of alignment.

[zdc1]

I'm kind of getting at the fact that people tend to optimistically overestimate the likelihood of positive outcomes. This is true for lottery tickets, and stock options (every startup is definitely going to the moon).

From the company's perspective, options/equity are great for creating alignment. From an employee perspective, employees need to understand that they are making a bet and have limited control over the outcome of said bet.

[chermi]

I agree with that aspect, but I still think there's a difference. You can't effect the outcome of lotto ticket. To some extent, you can with stock. The incentive probably helps the company more than it helps the individual, but that's the nice part of the feedback again.