In the Case of a Moral-Hazard Problem,which of the Following

question 309

Multiple Choice

In the case of a moral-hazard problem,which of the following is not a way for the principal to encourage the agent to act more responsibly?

• A) the principal could better monitor the agent
• B) the principal could pay the agent above-equilibrium wages
• C) the principal could delay payment to the agent
• D) the principal could pay the agent below-equilibrium wages

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