Exam 22: Managing Incentives

When productivity is variable, piece rates tend to ______ compared with wage rates.

Cheap cars are sometimes lemons, but they are still sold to unsuspecting customers, hurting repeat business. The lesson about incentives from this is that:

The incentive to cut costs is ________ for ________ prisons (as/than) it is for ________ prisons.

Grading on a curve ________ environmental risk but ________ ability risk.

Which of the following are arguments in favor of private prisons? I. Private prisons are likely to have lower costs than public prisons. II. Private prisons have a stronger incentive to reduce inmate violence because it lowers costs. III. Private prisons have a stronger incentive to uphold prisoner's civil rights because it reduces expensive lawsuits.

When a local utility company in California told people whether they were using more or less energy compared with the average in their neighborhood, the consumer's use did not typically change.

One concern with private prisons is that they might skimp on costs to increase profits.

Which of the following would best reduce ability risk in tournaments?

Tournaments work best when risk from the outside environment is ______ ability risk.

Tournaments typically increase cooperation.

Which of the following statements about piece rate pay is TRUE? I. Piece rate systems will attract more productive workers than hourly wage plans. II. Workers may fear that the piece rate could be lowered in the future. III. Less productive workers may prefer an hourly wage.

Use the following to answer questions: Figure: Weekly Pay -(Figure: Weekly Pay) Firms A and B are radio stations that hire salespeople to sell advertising slots. The firms' compensation schemes appear in the figure. Assuming that all workers put in the same amount of hours, firm A pays its salespeople using a(n) ______ and firm B pays its workers using a(n) ______.

Corporate culture helps firms ________ what is ________ to measure.

Explain the differences in incentives regarding organ donation in the United States and Austria.

______ decides the compensation for a professional golfer in a given week.

Premed students (who compete for a limited number of slots in medical schools) sometimes sabotage the experiments of other premed students. This is an example of:

Executive pay based on relative performance:

Suppose the economy is in a recession. Which of the following is the best incentive scheme for the manager of a large auto sales center?

The closer "what you pay for" is to "what you want," then the more you can rely on weak incentives.

A successful organization aligns self-interest with the organization's interest.