In particular, the price of labor (wage or salary) is reduced, reflecting the disutility of risk. Since workers are normally paid up front, regardless of the final outcome, the risks of production are assumed by the investors rather than the workers. The investors cannot be certain what price they will receive for the consumers' good, or even whether the whole process of production will yield its intended results. The amount of wage reduction depends on the degree of risk associated with the particular enterprise.

The impact of risk on the value of labor can perhaps be better understood by examining how it applies when one works for oneself, rather than hiring the labor of others. Suppose that Crusoe is deciding whether to produce one unit of good P, one unit of good Q, or both. Each product can be produced in a single stage of production, with the same period of production. Each production process requires only land and labor, with the same land requirement in each case.