Asked by Marilyn Camille on Sep 24, 2024
Verified
The following is NOT an example of a potential monitoring solution to moral hazard
A) blocking social network sites on company computers
B) closed circuit TVs throughout a warehouse
C) requiring a kitchen remodeling contractor to be 'bonded'
D) listening in on call center conversations
Moral Hazard
The risk that one party to an agreement can change their behavior to the detriment of another after the transaction has taken place, often due to asymmetrical information.
Bonded
indicates a state of being secured by a bond, involving a financial guarantee or protection against losses.
- Identify techniques to alleviate moral hazard in various scenarios.
Verified Answer
DL
Deena Levinson4 days ago
Final Answer :
C
Explanation :
Requiring a kitchen remodeling contractor to be 'bonded' is a risk management tool to mitigate against financial loss due to the contractor's failure to complete the job or meet contractual obligations. It is not directly related to monitoring for moral hazard. The other options (A, B, and D) involve monitoring employee behavior to deter or detect moral hazard.
Learning Objectives
- Identify techniques to alleviate moral hazard in various scenarios.
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