Principal-Agent Problems Are Less Likely to Arise

question 187

Multiple Choice

Principal-agent problems are less likely to arise

• A)if it is easy for principals to know agents' actions and if there is less conflict between their goals
• B)if it is difficult for principals to know agents' actions and if there is less conflict between their goals
• C)if it is easy for principals to know agents' actions and if there is some difference in their goals
• D)if it is difficult for principals to know agents' actions and if there is some difference in their goals
• E)if agents have higher incomes

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Definitions:

Gilbert and Malone

Refers to psychologists Daniel Gilbert and Patrick Malone, known for their work on social psychology, specifically on cognitive biases and errors in attribution.

Mastery Oriented

Refers to an approach or mindset focused on understanding and mastering a skill or knowledge area, rather than merely performing well to receive external rewards.

Generous Person

An individual known for giving more of something, especially money or time, than is strictly necessary or expected.

False Consensus Hypothesis

The tendency to overestimate the extent to which others share our beliefs, attitudes, and behaviors.