Question 1

Violations of psychological contracts are basically the same as unmet expectations.(Psychological Contract Violation)

Accepted Answer

Violations of psychological contracts involve a perceived breach of mutual obligations, while unmet expectations may not necessarily involve a breach of agreed-upon terms.

Question 2

Employee benefits need to be considered as economic exchange between employer and employee rather than social exchange relationship.(How Employee Benefits Constitute Social Exchange)

Accepted Answer

The statement in the question is the opposite of what is true. Employee benefits are often seen as part of a social exchange relationship between employer and employee, where both parties give and receive support beyond the economic exchange of salary or wages.

Question 3

Being able to spread the administrative costs to larger groups of employees,to reduce the health insurance cost per employee,is referred to as what? (Cost Advantage)

Accepted Answer

Economies of scale refer to the cost advantage that arises with increased output of a product, or in this case, the spreading of administrative costs over a larger group of employees, thereby reducing the cost per employee for health insurance.

Question 4

Which of the following is not closely associated with the nature of transactional psychological contracts? (Psychological Contracts)

Accepted Answer

Transactional psychological contracts are characterized by an economic and extrinsic focus, being close-ended and specific, and having a narrow scope. They are usually short-term and task-oriented, with a focus on the completion of a specific task or project. Long-term relationships are more closely associated with relational psychological contracts.

Question 5

In insurance terms,what does adverse selection refer to? (Cost Advantage)

Accepted Answer

Adverse selection refers to the tendency of an insurance pool to disproportionately attract "bad risk" employees and discourage "good risk" employees. This happens when employees who are likely to have higher medical costs are more likely to enroll in the insurance plan, while healthier employees opt out, which leads insurance companies to raise premiums to cover the higher costs.

Question 6

Why does health insurance become less expensive when the size of the insurance group increases? (Cost Advantage)

Accepted Answer

With a larger insurance group, the risk pool is spread out among more people, which means the overall risk for the insurance company is lower. This allows the insurance company to offer lower premiums to the group. Administrative costs are also lower since they can be spread out among more individuals, and the threat of high-risk individuals driving out low-risk ones is less since there are more people in the group.

Question 7

Which of the following employee benefits is more relevant for relational psychological contracts? (Psychological Contracts)

Accepted Answer

Accommodation and enhancement benefits, such as flexible work options, training and development opportunities, and recognition programs, can contribute to a positive and supportive work environment, which is important for maintaining and strengthening relational psychological contracts. Legally required benefits, promotions, and life insurance are all important employee benefits, but they may not have the same impact on relational psychological contracts.

Question 8

The degree to which an increase in benefit costs is passed along to employees in the form of lower cash wages generally does NOT depend on which of the following factors? (Who Pays for Benefits?)

Accepted Answer

Whether or not the employee is a manager does not affect the degree to which an increase in benefit costs is passed along to employees in the form of lower cash wages. The other factors listed, such as the cash value employees place on benefits, the degree to which employers will adjust hiring based on market compensation, and whether benefit costs increase for all employers or a particular one, can all potentially influence the extent to which benefit costs are passed along to employees.

Question 9

What is medical underwriting? (Cost Advantage)

Accepted Answer

Medical underwriting is a process where employees provide their past medical history to insurers. This is used by insurers to determine the level of risk and cost associated with insuring a particular individual or group. By collecting information about past medical conditions, insurers can adjust the premiums they charge to reflect the expected cost of providing coverage. This allows insurers to offer lower premiums to low-risk individuals, and higher premiums to higher-risk individuals.

Question 10

In 2013,which age group had the highest average total medical expenditures? (Cost Advantage)

Accepted Answer

Adults aged 65 and older typically have the highest average total medical expenditures due to increased health issues and the need for more medical care as people age.

Question 11

Which of the following can be avoided by using experience ratings? (Cost Advantage)

Accepted Answer

Experience ratings allow insurance companies to adjust premiums based on the individual group's claims history. This helps to avoid adverse selection, where high-risk individuals are more likely to enroll in insurance plans, leading to higher claims and costs for the insurance company. Therefore, by avoiding adverse selection, experience ratings can provide a cost advantage for insurance companies. Medical underwriting, economies of sales, and insurance pooling are not directly related to experience ratings and cost advantage.

Question 12

Which of the following employee benefit might fulfill both transactional and relational expectations of employees? (Psychological Contracts)

Accepted Answer

The answer of Which of the following employee benefit might...

Question 13

What are the two basic causes for psychological contract violations? (Psychological Contract Violation)

Accepted Answer

The two basic causes for psychological contract violations are renege, which refers to a party failing to keep their promises, and incongruence, which refers to a disparity between the expectations of the two parties involved in the contract.

Question 14

Psychological contracts do not develop and change over time.(Psychological Contracts)

Accepted Answer

Psychological contracts are believed to develop and change over time as employees' expectations and experiences at work evolve. These contracts are based on perceived obligations between employers and employees, and as these obligations are met, violated, or renegotiated, the psychological contract may be adjusted.

Question 15

What are the three main reasons that employers offer discretionary benefits? (The Economics of Employee Benefits: Why Do Employees Offer Benefits?)

Accepted Answer

Employers offer discretionary benefits primarily because they have a cost advantage in purchasing benefits compared to individuals, these benefits aid in recruiting and retaining workers, and there are tax incentives for companies to provide them.

Question 16

What is an insurance pool? (Cost Advantage)

Accepted Answer

An insurance pool refers to a group of people who come together to purchase a group insurance policy, thereby spreading risk and potentially reducing costs for the individuals involved.

Question 17

Prime-age workers are in what age group? (Who Pays for Benefits?)

Accepted Answer

Prime-age workers are typically defined as individuals between the ages of 30 and 54, as they are considered to be in their most productive and valuable years of work. This age group is often the focus of discussions regarding employment, job training programs, and benefits packages.

Question 18

Legally required benefits would form a part of employees' transactional expectation.(Psychological Contracts)

Accepted Answer

Legally required benefits, such as minimum wage and social security contributions, are considered a part of employees' transactional expectations as they are required by law and are a basic right of employees.

Question 19

Retirement plans is a good example of benefits that fulfill both transactional and relational expectations.(Psychological Contracts)

Accepted Answer

Retirement plans provide a tangible benefit (transactional expectation) while also demonstrating a long-term commitment from the employer to the employee (relational expectation).

Question 20

Violations of psychological contracts are likely to be more intense than unmet expectations because of feelings of betrayal and the onset of mistrust.(Psychological Contract Violation)

Accepted Answer

Psychological contracts are based on mutual expectations between employers and employees, and violations of these contracts can result in feelings of betrayal and mistrust. This can make the impact of a violation more intense than simply having an unmet expectation.

Quiz 2: The Psychology and Economics of Employee Benefits