A time-consistent policy is one where
A)the parties to a contract are free to renegotiate the contract at a later date
B)the agent has no incentive to take an action to the detriment of the principal once the contract is agreed upon
C)the principal can contract directly on the effort level chosen by the agent
D)the parties to a contract has no incentive to renegotiate it at a later date
E)both b and c

Question

Quizplus · Accepted Answer

A time-consistent policy is one where the conditions or incentives set at the beginning of an agreement remain optimal or desirable throughout the period of the agreement, making it unnecessary or unattractive for the parties involved to renegotiate the terms later on.

A Time-Consistent Policy Is One Where