Rachel Gives Karen a Good Rating in a Performance Appraisal

question 22

Multiple Choice

Rachel gives Karen a good rating in a performance appraisal because Karen once handled a difficult customer by empathizing with him. Since that incident, Rachel believes that Karen is the smartest and most efficient employee in the organization. Even though Karen has multiple positive attributes to her personality, Rachel makes an overall impression of Karen based on her quality of empathy. This is an example of the

• A) bandwagon effect.
• B) contrast effect.
• C) halo effect.
• D) decoy effect.

---

Definitions:

Substitution Effect

The substitution effect describes a change in consumption patterns due to shifts in relative prices, where consumers prefer cheaper alternatives when the price of a good rises, keeping their utility level constant.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, in contrast to a normal good.

Indifference Curves

A graph showing different bundles of goods between which a consumer is indifferent.

Utility Levels

Measures of satisfaction or happiness that consumers derive from consuming goods and services.