Economic Theory Implies That the Incentive for a Manager of a Publicly

question 176

Multiple Choice

Economic theory implies that the incentive for a manager of a publicly operated firm (for example, a state university or the post office) to promote internal efficiency of their operations would be

• A) strong because inefficiency is easily detected and leads to the loss of voter support.
• B) strong because public officials are unconcerned about personal gain.
• C) weak because government employees are less educated than employees who work in the private sector.
• D) weak because it is difficult for voters to detect inefficiency and for public officials to gain from actions that would improve the efficiency of government.

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Definitions:

Availability

The state of being able to be used or obtained; readiness for use.

Representativeness

A cognitive bias in decision making where the likelihood of an occurrence is evaluated based on how similar it is to stereotypes or typical cases.

Anchoring Bias

A mental shortcut in which a person gives disproportionate weight to the first piece of information they receive (known as the "anchor") during decision-making processes.

Anchoring And Adjustment

Anchoring and adjustment is a cognitive bias in decision-making where an initial piece of information, the "anchor," heavily influences subsequent judgments and adjustments.