What prevents a firm from offering a delayed-compensation scheme to its employees and then firing each worker when the worker's wage exceeds his or her value of marginal product?
A) Firms that offer delayed-compensation schemes are legally barred from firing workers.
B) Profits would increase by allowing the worker to continue on.
C) The worker will have already retired by the time the worker's value of marginal product exceeds his or her wage.
D) Profits are insensitive to when the worker quits his job.
E) The firm would lose the trust of the workers, and new workers would not accept the payment scheme.

Question

Quizplus · Accepted Answer

The firm would lose the trust of current and potential future employees if it were to engage in such practices, making it difficult to attract and retain talent under the same scheme. Trust is crucial in employment relationships, especially in schemes that involve delayed compensation.

What Prevents a Firm from Offering a Delayed-Compensation Scheme to Its