In the Principal-Agent Model,the Standard Deviation of the Expected Value

question 15

Multiple Choice

In the principal-agent model,the standard deviation of the expected value of effort:

• A) decreases with the riskiness of the outcome.
• B) captures the inherent riskiness of the environment.
• C) is equal to zero.
• D) is proportional to the marginal disutility of effort.
• E) is increasing in a worker's ability.

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