Which of the Following Is Not a Characteristic of Performance

Multiple Choice

Which of the following is not a characteristic of performance based pay?

A) The slope of the relationship between pay and performance for an employee provides incentives for effort,not the level of pay
B) Employees will always prefer performance based pay thus aligning principal/agent objectives
C) The overall value maximizing effort level for an employee occurs when personal marginal benefit equals personal marginal cost
D) Performance based pay can resolve hidden information problems
E) Pay contracts approaching 100% commission and negative salaries can occur