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:

Collaboration

The action of working together with others efficiently and effectively to achieve a common goal or complete a task.

Empowering Leadership

A leadership approach that aims to give employees more autonomy, authority, and encouragement to make decisions and contribute ideas.

Psychological Empowerment

The perception of having the control, competence, meaningfulness, and impact in one’s work role.

Developmental Support

Assistance or resources provided to an individual or group to facilitate growth, learning, and improvement in personal, academic, or professional areas.