Which of the Following Is Suggested by the Risky Worker

question 12

Multiple Choice

Which of the following is suggested by the risky worker hypothesis?

• A) Risky workers have worse option values than safe workers.
• B) Firms minimize downside risk by terminating employment contracts.
• C) The worst outcome for a firm is earning small positive profits.
• D) The firm breaks even if the safe worker is a diamond in the rough.
• E) Workers have higher expected value in this model than in the efficiency wage model.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.