An Example of the Principal-Agent Problem Occurs When

question 18

Multiple Choice

An example of the principal-agent problem occurs when

• A)an agent is more motivated than the principle to provide a high-quality good or service.
• B)managers try to cope with employees that are inefficient.
• C)sole proprietors don't receive any money payment for their entrepreneurial skills.
• D)managers devise penalties that eliminate employee waste.
• E)managers devise incentives that encourage employees to act in the owner's behalf.

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Definitions:

Deontological Theory

A moral philosophy that evaluates the ethics of an action based on the action's adherence to rules or duties, regardless of the outcome.

Ethical Conduct

Behaviors and practices that comply with moral principles and professional standards, often guiding individuals and businesses in acting with integrity and fairness.

Self-Interest

Self-Interest describes actions or decisions motivated by personal gain, often without regard for others.

Moral Result

The outcome or impact of an action or decision judged according to ethical principles and moral values.