If an Agent Is Risk Neutral and a Principal Is

question 54

Multiple Choice

If an agent is risk neutral and a principal is risk averse,which of the following contracts would be efficient in risk bearing?

• A) A fixed fee is paid to the agent.
• B) A fixed fee is paid to the principal.
• C) An hourly rate is paid to the agent.
• D) The agent enjoys a share of the profit.

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Definitions:

Hominin Tools

Tools made by hominins, ancestors of modern humans, used to aid in activities such as hunting, processing food, and constructing shelters.

Left Africa

Refers to the migration of Homo sapiens out of Africa approximately 60,000 to 80,000 years ago, leading to the eventual global distribution of humans.

Monophyletic

Describes a group of organisms that are classified in the same taxon and share a common ancestor.

Polyphyletic

Describes a taxonomic group that does not share an immediate common ancestor and therefore does not form a clade.