To keep employees from shirking,invest in greater monitoring
A)when monitoring is expensive relative to its benefits
B)especially when monitoring is not very efficient
C)when employees respond well to incentive contracts
D)when incentives fail to solve either moral hazard and adverse selection problems with employees

Question

To keep employees from shirking,invest in greater monitoring
A)​when monitoring is expensive relative to its benefits
B)especially when monitoring is not very efficient
C)when employees respond well to incentive contracts
D)​when incentives fail to solve either moral hazard and adverse selection problems with employees

Quizplus · Accepted Answer

When incentives fail to solve moral hazard and adverse selection problems with employees, it becomes necessary to invest in greater monitoring to ensure that employees are not shirking. This is because shirking can lead to reduced productivity and lower profits for the company, and greater monitoring can help to deter employees from engaging in such behavior. However, monitoring can be expensive and inefficient, so it should be used only when necessary and when the benefits outweigh the costs. Additionally, companies should consider using incentive contracts to encourage employees to work hard and produce high-quality work, as this can reduce the need for monitoring in the first place.

To Keep Employees from Shirking,invest in Greater Monitoring