Type your question hereDescribe how a manager who derives satisfaction from both

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Type your question hereDescribe 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 $130,000.

Time spent working:  
Time spent shirking:  

When this same manager is given an annual, fixed salary of $130,000 and 5 percent of the firms profitsamounting to a total salary of $165,000 per yearthe manager chooses to work 9 hours and shirks for 1 hours. Given this information, which of the compensation schemes does the manager prefer?

The scheme with only a fixed payment of $130,000. The manager is indifferent between the two payment schemes. The scheme with fixed payment of $130,000 and a percentage of profits.

Explanation / Answer

The scheme with fixed payment of $130,000 and a percentage of profits.

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