Which of the following is not an example of a principal trying to solve the moral-hazard problem? The principal
A)calls the agent's references.
B)installs hidden cameras to monitor the agent's behavior.
C)pays the agent efficiency wages.
D)pays the agent a year-end bonus.

Question

Quizplus · Accepted Answer

Calling the agent's references is a method used during the hiring process to assess the agent's past behavior and qualifications, not a method to solve the moral-hazard problem after hiring.

Which of the Following Is Not an Example of a Principal