Asked by Natalie Flores on Sep 24, 2024
Verified
To decrease anxiety in its most accomplished teachers,a school decides to offer them tenure,to help them concentrate on teaching better.Instead it notices that even the best of the teachers started to get sloppy with their work.The school did not foresee
A) Adverse selection
B) Moral hazard
C) All of the above
D) None of the above
Moral Hazard
Moral hazard occurs when one party to an agreement engages in risky behavior or fails to exercise responsible care because this party knows another bears the consequences.
Tenure
The duration or period of time a person holds a particular position, job, or place of living.
Accomplished Teachers
Educators who have achieved a high level of expertise and excellence in their teaching practices.
- Apprehend the theory of moral hazard, observing its sources and ensuing effects.
- Detect occurrences of moral hazard in everyday situations and business methodologies.
Verified Answer
IM
iKing Maxwell2 days ago
Final Answer :
B
Explanation :
Moral hazard refers to the situation where people tend to take more risks or be less careful when they are protected from the consequences of their actions. In this case, the teachers are protected from losing their job, so they may feel less motivated to put in the effort required to maintain their high level of teaching. This can result in sloppy work and decreased performance, despite the tenure being offered as a means to decrease anxiety and improve performance. Adverse selection, on the other hand, refers to situations where one party has more information than the other party, resulting in one party being disadvantaged. This does not seem to be applicable in this scenario.
Learning Objectives
- Apprehend the theory of moral hazard, observing its sources and ensuing effects.
- Detect occurrences of moral hazard in everyday situations and business methodologies.