In the case of a moral-hazard problem, which of the following is not a way for the principal to encourage the agent to act more responsibly? The principal could
A)better monitor the agent.
B)pay the agent above-equilibrium wages.
C)delay payment to the agent.
D)stop paying bonuses.

Question

Quizplus · Accepted Answer

Stopping bonuses would not incentivize the agent to act more responsibly, as bonuses are typically used as a reward for good performance and to align the agent's interests with those of the principal.

In the Case of a Moral-Hazard Problem, Which of the Following