The Principal-Agent Problem Is a Problem

question 89

Multiple Choice

The principal-agent problem is a problem

• A)caused by a person (principal)who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way.
• B)caused by agents pursuing their own interests rather than the interests of the principals who hired them.
• C)of the power system of boss and subordinate where the boss (principal)exerts influence over his subordinates (agents)using punishment or threat.
• D)that exists when a person (principal)has more information about the task than the agent he hires to perform the task.

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Definitions:

Experiment

A scientific procedure in which variables are manipulated and the effects on other variables are gauged. Large groups of subjects are generally used, and the results are analyzed statistically. In a true experiment, subjects are randomly assigned to experimental and control groups.

Rejection Hypothesis

The theory proposing that the experience of rejection, or anticipated rejection, by significant others or society can lead to negative psychological outcomes.

Test Hypothesis

The process of conducting a scientific test to confirm or refute a hypothesis, typically involving controlled experiments or observations.