When new professors are hired,their job performance is monitored closely.If they meet their institution's standards,they will eventually receive tenure.After receiving tenure,professors' job performance is less closely monitored,and they become difficult to fire.Tenure thus creates
A) adverse selection.
B) a Condorcet paradox.
C) a screening problem.
D) moral hazard.

Question

Quizplus · Accepted Answer

Tenure creates a situation of moral hazard where professors may become complacent and less motivated to perform well since they have job security. This decreases the incentive for the university to monitor their job performance closely.

When New Professors Are Hired,their Job Performance Is Monitored Closely