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Rachel Dumitru
on Nov 25, 2024

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Salary smoothing, automatic payroll deductions, and early withdrawal penalties are all examples of

A) mechanisms imposed by companies to extract more from their workers and customers.
B) policies that do not fundamentally alter decisions because they do not change the benefits or costs of an action.
C) precommitments.
D) hardwired heuristics.

Precommitments

Commitments made in advance to a specific course of action, often used as a strategy to restrain one's future actions.

Salary Smoothing

The practice of moderating the fluctuations in an employee's pay through methods that stabilize income, such as averaging earnings over time or providing benefits that reduce the impact of income variability.

Payroll Deductions

The amounts withheld from an employee's payroll for taxes, insurance premiums, benefits, and other similar expenses.

  • Understand precommitments as a strategy to address time inconsistency and self-control problems.
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Itzel QuintanaNov 28, 2024
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