Which of the Following Compensation Schemes Can Be Explained as an Attempt

question 224

Multiple Choice

Which of the following compensation schemes can be explained as an attempt to solve a principal-agent problem?

• A) Real estate agents are paid on a strict commission basis; if they don't sell a client's listed property they don't get paid.
• B) Personal injury lawyers often work on a contingency basis. If the lawyer wins the case they receive a significant share of the award; if the lawyer doesn't win the case the lawyer doesn't get paid.
• C) Traveling sales people, who are costly and difficult to monitor, generally receive a significant share of their compensation in the form of commissions or bonuses for meeting sales targets.
• D) All of the above compensation schemes attempt to solve a principal-agent problem.

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Definitions:

Biological Factors

Physical or genetic traits that influence an individual's health, behavior, and development.

Mild Level

A low intensity or severity degree of a condition, situation, or phenomenon.

Down Syndrome

A form of intellectual disability caused by an abnormality in the 21st chromosome.

Trisomy 21

Also known as Down syndrome, it is a genetic disorder caused by the presence of all or part of a third copy of chromosome 21.