Two Common Agency Problems Include

question 69

Multiple Choice

Two common agency problems include

• A) managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk aversion.
• B) managers not investing enough of a firm's capital in managerial perquisites and managerial risk aversion.
• C) managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk seeking.
• D) managers not investing enough of a firm's capital in managerial perquisites and managerial risk seeking.

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Definitions:

Respondent Conditioning

A learning process that involves creating an association between a naturally occurring stimulus and a previously neutral stimulus.

Shaping

A method of behavior training in which positive reinforcement is used to gradually guide an individual toward a desired behavior.

Positive Reinforcement

A process in behavioral psychology where the introduction of a rewarding stimulus following a desired behavior increases the likelihood of that behavior occurring in the future.

Secondary Reinforcement

A stimulus that gains its reinforcing power through its association with a primary reinforcer, such as praise, tokens, or money.