Long-Term Contracts Are NOT Efficient If

question 45

Multiple Choice

Long-term contracts are NOT efficient if:

• A) a firm engages in relationship-specific exchange.
• B) specialized investments are unimportant.
• C) the contractual environment is simple.
• D) managers shirk.

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Definitions:

Internal Cause

An explanation of behavior as stemming from personal dispositions, traits, abilities, or feelings.

Conformity Rates

The measure of how much individuals change their behavior or beliefs to match those of a group, often studied in social psychology to understand the influence of group dynamics on individual actions.

United States

A country located primarily in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

Fundamental Attribution Error

The tendency to overestimate the influence of personality and underestimate the influence of situational factors when evaluating others' behavior.