When One Party to a Transaction Has Incentives to Engage

question 23

Multiple Choice

When one party to a transaction has incentives to engage in activities detrimental to the other party,there exists a problem of

• A)moral hazard.
• B)split incentives.
• C)ex ante shirking.
• D)pre-contractual opportunism.

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Definitions:

Family Member

An individual who is part of a larger group related by blood, marriage, or legal processes such as adoption.

Less Education

A term describing individuals or populations that have attained lower levels of formal schooling or qualifications compared to a benchmark standard.

International Competition

Rivalry between businesses or economies from different countries, competing in a global marketplace.

Regulation

The enforcement of laws by government or regulatory agencies that dictate how business can operate, often to protect consumers and the market.