Shirking is most likely to occur when
A)the principal monitors the agents extensively.
B)employees are paid an hourly wage.
C)a piece rate contract is used.
D)an assembly line is used for production.

Question

Quizplus · Accepted Answer

Shirking refers to the act of employees exerting less effort than they are capable of because their performance cannot be easily monitored or because they face a low probability of receiving a reward for good performance. Hourly wage employees are typically not directly incentivized to work harder, and there is often limited monitoring of their activity, making shirking more likely to occur. Piece rate contracts, in which employees are paid per unit of output, can incentivize higher effort levels and reduce shirking. Assembly lines typically involve direct supervision and monitoring, making shirking less likely to occur.

Shirking Is Most Likely to Occur When