An Incentive Compatibility Constraint Is a Constraint in a Contract

question 13

Multiple Choice

An incentive compatibility constraint is a constraint in a contract that ensures the agent

• A) will be willing to take the prescribed action once the agent joins by offering incentives to do so
• B) is better off taking the contract and joining the firm rather than not
• C) realizes that rewards depend not only on the agent's actions, but also on the actions of the other agents in the tournament

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