Confronted with Agency Problems,which of the Following Is Not One

question 46

Multiple Choice

Confronted with agency problems,which of the following is not one of the challenges for principals?

• A)Shape the behavior of agents so that they act in accordance with the goals set by principals
• B)Reduce the information asymmetry between agents and principals
• C)Develop mechanisms for removing agents who do not act in accordance with the goals of principals
• D)Develop mechanisms for removing agents who mislead principals
• E)All of these choices

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Definitions:

Nash Equilibrium

A concept in game theory where each player's strategy is optimal, considering the strategies of other players, and no player has anything to gain by changing only their own strategy.

Pure Strategies

In game theory, a strategy where a player consistently follows a specific action or plan whenever a particular situation arises.

Dominant Strategy

In game theory, a strategy that is the best for a player to follow, regardless of the strategies chosen by other players.

Arbitration Clauses

Provisions within a contract that require disputes arising under the contract to be resolved through arbitration rather than through court litigation.