Discuss the interplay of the endowment effect

Assignment Help Econometrics

Reference no: EM131309413

You are a personnel manager at a ball-bearing factory. You are considering two schemes to motivate your employees during a period of particularly brisk business. In Scheme A, you tell your employees, "If you increase your output by 10%, I will give you a $500 bonus at the end of the month." In Scheme B, you tell your employees, "I am giving you a $500 bonus. But if you do not achieve 10% growth by the end of the month, I will withdraw it."

a. If your employees are completely rational, will they be motivated more by Scheme A, Scheme B, or will both schemes motivate them equally?

b. If your employees are swayed by the endowment effect, which scheme is likely to be most effective in motivating them? Explain your answer.

c. Discuss the interplay of the endowment effect and framing bias inherent in this problem.

Reference no: EM131309413

Questions Cloud

What is it saying are the key areas of agreement : Determine whether this document is an example of theology or religious studies. Support your position with brief discussions of examples from at least 2 different sections of the document. This document discusses the Catholic tradition's relationsh..

Create a matrix comparing features of presentation software : Create a matrix comparing five features of presentation software. Using these five features, compare two presentation programs. Include a brief reflection on how the programs meet or fail to meet your expectations.

Imagine what the audience reaction might be : Imagine what the audience reaction might be and whether a direct or an indirect organizational plan would be better.

Characterize levi current strategy : How would you characterize Levi's current strategy? What elements of the marketing mix are now changed from nation to nation? What are the benefits of Levi's new marketing strategy? Is there a downside?

Discuss the interplay of the endowment effect : If your employees are completely rational, will they be motivated more by Scheme A, Scheme B, or will both schemes motivate them equally?

Global production to china : a) What are the benefits to Philips of shifting so much of its global production to China? b) What are the risks associated with a heavy concentration of manufacturing assets in China?

How does your list compare to the other groups lists : Make a list of all the suggestions, and then share your list with the other groups.- How does your list compare to the other groups' lists?

Converters for the aerospace industry : FCX Systems, which manufactures power converters for the aerospace industry, realized that to continue to grow, the company would have to seek opportunities in foreign markets. Today, the company is the recipient of numerous accolades for its expo..

Create a word or pdf document that describes your process : Create a word or PDF document that describes your process, steps and results. Be sure to describe your schema and why you selected the tables and columns you did for your Private database.

User Account

All Pages