Suppose that a publisher is considering how to pay an author for writing a book. The publisher would like the author to put forth his maximum effort, but the publisher is unable to observe the author's effort. 
Definitions:
Pension Funds
Investment pools that pay for workers' retirements. Contributions are made by employers, employees, or both, and the funds are invested on the employees' behalf.
Secondary Market Transaction
The buying and selling of existing financial securities among investors or traders, which occurs after the initial issuance of the securities.
Issuing Corporation
The company or entity that releases or sells securities, such as stocks or bonds, to raise capital.
Securities and Exchange Commission
The Securities and Exchange Commission (SEC) is a U.S. federal agency responsible for regulating the securities markets, enforcing securities laws, and protecting investors.
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