Question
She could work in a company where he would get a fixed wage of 40,000. Instead, she decides to accept a different job offering a
She could work in a company where he would get a fixed wage of €40,000.
Instead, she decides to accept a different job offering a fixed wage of €38,000 and a bonus which depends on performance.
She knows that the bonus will be worth €3,800 with a probability of 50% and nothing with a probability of 50%.
Which is correct?
This story is not consistent. Given that she is risk neutral, her decision is not rational. | |
This story is consistent. Her decision can be rational despite her attitude towards risk. |
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Answer A This story is consistent His decision can ...
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Introduction to Financial Accounting
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
11th edition
978-0133251111, 013325111X, 0133251039, 978-0133251036
