USEmployees Who Formerly Wanted to Defer Part of Their Compensation

question 96

Multiple Choice

U.S.employees who formerly wanted to defer part of their compensation to a retirement plan typically had to lower their take-home pay as they "opted in" to the plan.Now companies are being encouraged to enroll their employees in the plan automatically while allowing them to choose to raise their take-home pay by "opting-out" of the plan.Under the "opt-out" rather than "opt-in" system,enrollments in retirement plans soared.This is an example of the effects of

• A) overconfidence.
• B) confirmation bias.
• C) framing.
• D) belief perseverance.

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Definitions:

Stockholder Investments

Funds or assets that shareholders contribute to a corporation in exchange for ownership interest in the form of stock.

Dividends

Dividends refer to payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Expense Recognition

An accounting principle that matches expenses with revenues in the period in which the incurred expense contributes to revenue generation, regardless of when the cash transaction happens.

Revenue Reported

The total amount of income recognized by a company during a specific accounting period from its business activities.