Which of the following terms describes a contract based on information that cannot be observed by courts or arbitrators?
A)Explicit incentive contract
B)Implicit incentive contract
C)Risk sharing contract
D)Compensation contract
E)Pay-for-performance

Question

Quizplus · Accepted Answer

An implicit incentive contract is based on information that cannot be observed by courts or arbitrators. This type of contract relies on the parties' mutual trust and understanding rather than explicit contractual terms. Explicit incentive contracts, risk sharing contracts, compensation contracts, and pay-for-performance contracts all involve observable terms and outcomes that can be enforced by a third party.

Which of the Following Terms Describes a Contract Based on Information