According to behavioral psychologists,which of the following compensation packages would most people rank as the least desirable?
A) A guaranteed base salary of $54,000
B) A base salary of $50,000, plus a 50% chance of earning a $4,000 bonus for meeting minimum productivity requirements
C) A base salary of $54,000, with a 50% chance of sustaining a $4,000 penalty for failing to meet minimum productivity requirements
D) Choices (b) and (c) are, by an overwhelming majority of people, ranked as being equally undesirable

Question

Quizplus · Accepted Answer

Based on the principle of loss aversion, most people would find the prospect of losing $4,000 (with a 50% chance) to be more unpleasant than not having the chance to earn it at all. Therefore, option C with a base salary and a chance of penalty would be the least desirable.

According to Behavioral Psychologists,which of the Following Compensation Packages Would