Hudson Has Two Job Offers When He Graduates from College

question 128

Multiple Choice

Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of $40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson takes the offer that maximizes his expected utility and he is risk-neutral, then

• A) he will take the first offer.
• B) he will take the second offer.
• C) he is indifferent between the offers-both yield the same expected utility.
• D) Indeterminate from the given information-we cannot say what he will do.

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Definitions:

MMPI-II Assessment

The Minnesota Multiphasic Personality Inventory-2, a comprehensive psychological test that assesses personality traits and psychopathology.

DSM-5 Diagnosis

The process of identifying a mental disorder using the criteria outlined in the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition.

Confound

A variable that influences both the dependent and independent variables in a study, making the results ambiguous because its effects cannot be separated from those of the variables of interest.

Causal Role

The function or influence that one factor has in directly bringing about change or results in another factor.