The Risk That Imperfectly Monitored Agents Will Act in Dishonest

question 110

Multiple Choice

The risk that imperfectly monitored agents will act in dishonest or otherwise inappropriate ways is called:

• A) adverse selection.
• B) moral hazard.
• C) systematic risk.
• D) risk aversion.

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Definitions:

Positivism

A philosophical stance advocating that knowledge is only derived from logical and empirical observations, emphasizing the importance of observable evidence.

Dichotomous Conclusions

Findings or results that present an either-or situation, typically dividing outcomes into two distinct categories without overlap or continuum.

Universal Truth

A fundamental principle or fact that is valid at all times and in all places.

Scientific Method

A systematic and logical approach to discovering how things in the universe work, involving observation, hypothesis, experimentation, and conclusion.