The Problem of How a Manager Can Incentivize a Worker

question 96

Multiple Choice

The problem of how a manager can incentivize a worker to work in the interest of the manager is an example of:

• A) the principal-agent problem.
• B) adverse selection.
• C) moral hazard.
• D) information asymmetry.

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Definitions:

Trust

A firm belief in the reliability, truth, ability, or strength of someone or something.

Enlightened Self-Interest

A philosophy where individuals act in ways that benefit others because they understand that these actions are ultimately in their own best interest.

Block

To obstruct or prevent action or progress in a negotiation or any process.

Commons Dilemma

A situation in which individual interests conflict with collective well-being, often regarding the exploitation of shared resources.