One Possible Solution to an Incentive Problem Arising Under Unobservable

question 21

Multiple Choice

One possible solution to an incentive problem arising under unobservable actions is:

• A)to pay more and make the worker efficient.
• B)to be the boss and fire the inefficient worker and send a signal to others.
• C)to buy the agent's right to his total output.
• D)to sell the agent the right to the total production.

---

Definitions:

Converse

In logic, a statement formed by exchanging the hypothesis and conclusion of a given conditional statement.

Proposition

A statement that expresses a concept that can be true or false.

Converse

In logic, it refers to reversing the direction of a given implication; in geometry, it involves swapping the hypothesis and conclusion of a statement.

Proposition

In logic, a declarative sentence that is either true or false, serving as the building block for constructing arguments.