Agency Theory Says That the Principal Must Choose a Contracting

question 24

Multiple Choice

Agency theory says that the principal must choose a contracting scheme that _____.

• A)is not based on compensation systems such as merit pay
• B)helps the agent maximize his/her benefits
• C)provides complete autonomy to the agent
• D)does not offer outcome-oriented compensation to agents
• E)helps align the agent's interests with the principal's interests

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Definitions:

Bryson

Refers to a specific context or individual which requires additional information for a precise definition.

Capacity Building

The process of developing and strengthening the skills, instincts, abilities, processes, and resources that organizations and communities need to survive, adapt, and thrive.

Managing Risk

The process of identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.

Quantified Targets

Specific, measurable goals set by an organization or project, often expressed in numerical terms, to track performance and progress.