6. Describe how a manager who derives satisfaction from both income and shirking allocates a 10-hour day between these activities when paid an annual, fixed salary of $125,000. When this same manager is given an annual, fixed salary of $125,000 and 3 percent of the firm’s profits—amounting to $150,000 per year—the manager chooses to work seven hours and shirks for three hours.

Explain which of the compensation schemes the manager prefers.