If Information Is Asymmetric,explain Why the Hire Contract Is Not

question 73

Essay

If information is asymmetric,explain why the hire contract is not efficient in production and a moral hazard exists,but the fixed fee to the principal contract is efficient and does not pose a moral hazard problem.

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Definitions:

Self-Interested Politics

Actions and strategies employed by individuals or groups within an organization aimed at advancing personal agendas or interests, often at the expense of others.

Organizational Members

Organizational members are individuals who are part of an organization, contributing to its culture, goals, and overall function.

Internal Networks

Connections and relationships within an organization that facilitate communication and collaboration among its members.

Network Central

Network Central refers to the most interconnected and influential point or element within a network, playing a pivotal role in communication and resources flow.