What term best describes an agent who is indifferent between a sure thing and a gamble of equal expected value?
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Risk neutral
Which of the following terms describes a contract by which the value of the compensation depends on the measured performance of the employee?
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Implicit incentive contract
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Explicit incentive contract
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Pay-for-performance contract
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Compensation contract
Which of the following terms describes a phenomenon whereby individuals ignore their own information about the best course of action and instead simply do what everyone else is doing?
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Risk sharing
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Which of the following terms describes a contract based on information that cannot be observed by courts or arbitrators?
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Explicit incentive contract
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D. |
Implicit incentive contract
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E. |
Compensation contract
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What type of performance measurement based process was used to determine Jack Welch’s successor, Jeffrey Immelt, as CEO of GE?
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Management-by-objective system
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360-degree peer review system
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Which of the following terms best describes a contract that guarantees an agent some payment, but provides enough incentive so that the agent does not shirk?
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Variability reduction contract
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Certainty equivalent contract
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What term best describes the payment which must be offered to a risk-averse individual to willingly accept a gamble?
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