Incentives Are Not Likely to Be a Problem If

question 16

Multiple Choice

Incentives are not likely to be a problem if:

• A)workers' efforts are not contractible.
• B)only some actions are observable.
• C)all actions are observable.
• D)actions are not observable.

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Definitions:

Purely Incidental

Occurring by chance and of secondary importance, without direct relevance to the main issue.

Breach of Contract

The failure to perform as specified in a contract without a lawful reason.

Donee Beneficiary

A third party who benefits from a contract in which a promisee promises to perform certain actions that benefit this third party.

Acquired Rights

are rights that employees gain as a result of working for their employer over a period, often concerning job security and benefits.