ECONOMICS
MARKET FAILURES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Better monitoring
|
|
|
Higher Wages
|
|
|
Delayed payments
|
|
|
all of the above
|
Detailed explanation-1: -What Is a Good Way to Overcome the Principal-Agent Problem? A good way to overcome the principal-agent problem is by aligning the interests of both the principal and the agent and removing any conflict of interest. One of the best ways to do this is by aligning the compensation of the agent to a performance evaluation.
Detailed explanation-2: -The principal-agent problem in moral hazard stems from the inability of the principal to directly monitor the actions taken by the agent. In the case of humanitarian intervention, this means that the third party is not able to determine whether a domestic minority is engaging in provocation or restraint.
Detailed explanation-3: -The principal-agent problem describes a situation where: shareholders prevent managers from maximising profits.
Detailed explanation-4: -What is the principal-agent problem? It is a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them.
Detailed explanation-5: -Contract design. Performance evaluation and compensation. 04-Dec-2022