Risk-sharing forms of compensation are beneficial if employee are

Question

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Risk-sharing forms of compensation, such as stock options or profit sharing, are beneficial to employees who are risk averse. This is because these forms of compensation provide employees with the opportunity to share in the risks and rewards of the company's performance. Risk-averse employees may be more willing to accept a lower base salary if they have the potential to earn more based on the company's success. Risk-neutral employees may not be as interested in these forms of compensation as they are not affected by risk as much. Risk-preferring employees may be interested in higher-risk compensation plans, but this is not the focus of risk-sharing compensation.

Risk-Sharing Forms of Compensation Are Beneficial If Employee Are