Question 1
After reviewing
the accounts, the manager of a private school concludes that the previous
financial year was very good and decides to spend an extra £10,000 on teachers’
salaries for next year. Although the manager has decided how much extra money
is available for the next year, the manager has no idea how to allocate it and
how to pay it out. The manager’s first questions are:
(a) Should I distribute
the money to all 40 teachers, or should I reward a select group who have
performed exceptionally well?
(b) Should I pay
the extra money as a separate one-off bonus or in distinctive periodic
instalments, or should I simply increase the regular monthly salary?
Give the manager advice for both the above points based on behavioural
economics. Provide reasoning based on theory and evidence.
Question 2
The University’s Sport Centre, wants to know how to increase gym visits of
its members. Provide suggestions that are underpinned with behavioural
economic reasoning. Also discuss empirical evidence which underpins the
theories and hypotheses you draw upon.
– Use behavioural economice and provide reasoning based on theory and evidence
– Each question is 800 words and a total of 1600 maximum