The traditional year-end bonus paid to workers

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The year-end bonus can be seen as a response by employers to the moral-hazard problem. Moral hazard refers to the possibility that workers will shirk or not perform at their highest level once they are hired. By providing a bonus, employers can incentivize workers to work harder throughout the year in order to receive that bonus. This can help mitigate the moral-hazard problem and ensure that workers are performing to the best of their abilities.

The Traditional Year-End Bonus Paid to Workers