Under deferred compensation packages,
A) a moral hazard occurs if a firms fires a good worker before the worker receives her deferred compensation.
B) a moral hazard occurs if workers decide not to shirk so as to receive the deferred compensation.
C) moral hazards are avoided.
D) workers' wages are below their marginal revenue product as they near retirement.

Question

Quizplus · Accepted Answer

Deferred compensation packages can create a moral hazard if a firm has an incentive to fire a good worker before they receive their deferred compensation, thus avoiding the payout.

Under Deferred Compensation Packages