What might explain a professional baseball player having lower production the year after signing a multimillion dollar contract?
A) the substitution effect
B) the endowment effect
C) bounded rationality
D) the income effect

Question

Quizplus · Accepted Answer

The income effect could explain why a professional baseball player has lower production the year after signing a multimillion dollar contract. With a significant increase in income, the player may experience a decrease in motivation or work ethic, resulting in lower productivity on the field.

What Might Explain a Professional Baseball Player Having Lower Production