In a Principal-Agent Relationship, Moral Hazard Might Occur If

question 30

Multiple Choice

In a principal-agent relationship, moral hazard might occur if

• A)the agent can hide his actions from the principal.
• B)the principal and agent are married.
• C)payoffs are based on a state of nature.
• D)the principal can hide her actions from the agent.

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Definitions:

Renaissance Man

An individual who has wide interests and is expert in several areas, embodying the ideal of the Renaissance's cultural achievements.

Machiavelli

Niccolò Machiavelli, a Renaissance political philosopher from Florence, known for his work "The Prince," advocating for pragmatic and sometimes ruthless political leadership.

Benevolent Rulers

Leaders or monarchs who are known for their kindness and desire to promote the welfare of their people.

Holy Roman Empire

A diverse collection of regions in Central Europe that emerged in the Early Middle Ages and lasted until it was disbanded in 1806.