If Effort Is Unobservable and Revenues Are Riskless,firms Can Design

question 13

Multiple Choice

If effort is unobservable and revenues are riskless,firms can design incentive-compatible compensation schemes by offering workers:

• A) profit shares.
• B) increased nonmonetary benefits.
• C) increased fixed salary.
• D) decreased effort requirements.
• E) increased future compensation in the form of retirement pay.