A store owner may not be available to monitor the manager' actions continuously and at all times.This inability to observe actions falls under the class of problems called:
A)the principle-agent problem.
B)adverse selection.
C)the conflict of interest.
D)the false consensus problem.
E)fundamental attribution error.

Question

Quizplus · Accepted Answer

The principal-agent problem occurs when one party (the principal) cannot fully monitor the actions of another party (the agent), leading to potential misalignment of interests. In this scenario, the store owner (principal) cannot continuously monitor the manager (agent), fitting the definition of the principal-agent problem.

A Store Owner May Not Be Available to Monitor the Manager