In the Labor Market, Contracts Are Often Designed to Include

question 19

Multiple Choice

In the labor market, contracts are often designed to include a variable salary component that is tied to some measure of performance. Why?

• A) Such contracts provide workers with the incentive to work hard.
• B) Most people are risk-loving and thus variability in their compensation leads to higher total utility.
• C) Labor unions demand a variable salary component.
• D) The variable component reduces wages paid by firms.

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Definitions:

Fixed Interval Schedule

A reinforcement schedule in operant conditioning where rewards or consequences are presented at fixed time intervals, promoting a specific pattern of behavior over time.

Continuous Reinforcement

A reinforcement schedule in which a reward occurs after each instance of a behavior or set of behaviors.

Financial Compensation

Monetary payment provided to employees for their labor or services, including wages, salaries, bonuses, and benefits.

Factors

Elements or circumstances contributing to a result or situation.