When Lucian starts his new job, he is given the option to contribute to his retirement fund, which the company will match up to 5 percent of his base salary. Lucian knows he can afford to contribute to his retirement fund; he only needs to file a form to
activate the contributions and matching. According to prospect theory, if Lucian is typical in his behavior, we would expect him to:
A. take full advantage of the matching contribution because that would maximize his financial
well-being.
B. not file the form to start the contribution and match.
C. negotiate with his boss for a higher match in order to increase his returns.
D. only start contributions if the retirement portfolio is heavily weighted in high-return assets.
Answer: B
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A monopolist's price is "less than fair value" when it sells in export markets at prices ________ prices in its domestic markets or at prices _________ its average costs of production.
a. above; above b. above; below c. below; above d. below; below
The prisoners' dilemma provides insights into the
a. difficulty of maintaining cooperation. b. benefits of avoiding cooperation. c. benefits of government ownership of monopoly. d. ease with which oligopoly firms maintain high prices.