US Employees Who Formerly Wanted to Defer Part of Their

question 59

Multiple Choice

U.S. employees who formerly wanted to defer part of their compensation to a 401(k) 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 401(k) plan automatically while allowing them to choose to raise their take-home pay by "opting-out" of the 401(k) plan. Under the "opting out" rather than "opt-in" system, enrollments in 401(k) plans soared. This best illustrates the impact of

• A) overconfidence.
• B) a process simulation.
• C) framing.
• D) belief perseverance.

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Definitions:

Accounts Receivable

Refers to the money owed to a company by its customers for goods or services already delivered but not yet paid for.

Accounts Payable

Liabilities of a business that are due to be paid to creditors within a short period of time, typically within a year.

Fixed Assets

Long-term tangible assets that a company uses in its operations and is not expected to consume or sell within a year.

Dividends

Payments made by a corporation to its shareholder members, distributing earnings.