Risk Aversion by Managers Should Be Recognized When Revising Compensation

question 17

Multiple Choice

Risk aversion by managers should be recognized when revising compensation plans because:

• A) Compensation mix (salary, bonus) can influence a manager's risk aversion.
• B) Most companies want risk averse managers.
• C) Most companies want risk taking managers.
• D) It costs less to pay risk averse managers.

---

Definitions:

Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology.

Internal Experience

A person's subjective and introspective reflection on their own thoughts, feelings, and sensations.

Inferiority Complex

A psychological condition in which a person feels a lack of self-esteem and doubts about their abilities, often unconsciously, leading to overcompensation or withdrawal.

Adler

Alfred Adler, an Austrian medical doctor and psychotherapist, known for his theory of individual psychology which emphasizes the importance of the feeling of inferiority and the striving for superiority.