A Kind of Information Asymmetry Lies in the Hidden Action

question 33

Short Answer

A kind of information asymmetry lies in the hidden action, wherein one party's actions are not observable by the counterparty to the contract.Economists study this issue as one of _____.

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Definitions:

Labor Hours

A measure of the amount of work effort, in hours, performed by employees within a specific time period.

Normative View

An opinion or viewpoint based on what is considered to be ideal or how things should be rather than on empirical evidence.

Federal Minimum Wage

The lowest legal hourly wage that employers can pay their workers, as mandated by federal law.

Opportunity Cost

When deciding, the toll of not considering the next most beneficial alternative.