The Main Problem with Relying on Contracts to Reduce Opportunistic

question 40

Multiple Choice

The main problem with relying on contracts to reduce opportunistic behavior by alliance partners is that

• A) in cross-border alliances, the contracts are often not enforceable due to differences in legal systems.
• B) contracts create motivations for rule-evading behavior.
• C) contracts are ignored by opportunistic firms because the cost of enforcing the contract is too great for the other partner.
• D) it is impossible to specify all opportunistic actions by an alliance partner.

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Definitions:

Test Proctors

Individuals responsible for supervising exams to ensure that the rules and regulations are followed by all test-takers.

Cheating

The act of being dishonest or unfair in order to gain an advantage, especially in contexts such as academic studies or sports.

Availability Heuristic

The availability heuristic is a cognitive bias wherein individuals judge the likelihood of events based on their ability to easily recall examples, rather than on objective information or statistical probability.

Homeowners' Policies

Insurance contracts that offer property and liability coverage to individuals owning homes, protecting against various perils.