Which of the Following Would Be Best Considered to Be

question 9

Multiple Choice

Which of the following would be best considered to be an agency problem in the behaviour of the following financial managers?

• A) Michael chooses to enhance his firm's reputation at some cost to its shareholders by sponsoring a team of athletes for the Special Olympics.
• B) Bill chooses to pursue a risky investment for the company's funds, because his compensation will substantially rise if it succeeds.
• C) James ignores an opportunity for his company to invest in a new drug to fight Alzheimer's disease, judging the drug's chances of succeeding as low.
• D) Sue instructs her staff to skip safety inspections in one of the company's factories, knowing that it will likely fail the inspection and incur significant costs to fix.

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Definitions:

Extinction

A reinforcement contingency in which a behavior is followed by the absence of any consequence, thereby reducing the likelihood that the behavior will be repeated in the same or similar situations.

Negative Reinforcement

A type of conditioning where an undesirable outcome or event is removed following a behavior, increasing the likelihood of that behavior's occurrence in the future.

Social Cognitive Theory

A theoretical framework that emphasizes the importance of observational learning, social experiences, and environmental factors in the development of behaviors.

Observing

involves carefully watching or monitoring phenomena, behaviors, or activities to gather information, often as part of a research process or to learn.