1. Payments under some retirement plans are based on the average earnings in the last few years of employment. Discuss the potential incentive effects of this policy.
2. Companies can often gain if they listen to employees about what they prefer in the way of a fringe benefit package-a more preferred package serves to attract and retain employees at a lower cost. Nevertheless, many firms have shunned "menu plans" where each employee would be completely free to choose their own fringe benefit package. (For instance, those wanting health insurance could buy it through the company, whereas those who want some other benefit or cash would make different choices.) Why do you think many firms have avoided this type of menu plan?