Asked by chee wei leong on Sep 24, 2024
Verified
To keep employees from shirking,invest in greater monitoring
A) if monitoring is inexpensive relative to its benefits
B) especially when monitoring is not very efficient
C) when employees respond well to incentive contracts
D) when incentives solve both moral hazard and adverse selection problems with employees
Shirking
The behavior of avoiding or neglecting responsibilities, typically in the context of employment or duties.
Incentive Contracts
Contracts designed to align the interests of parties by providing rewards based on performance.
Monitoring
The process of systematically observing, checking, and recording activities or data for a specific purpose, often used in contexts of quality control, surveillance, or tracking.
- Understand the significance of surveillance and rewards in reducing risks associated with employee moral hazard.
Verified Answer
MH
Marianas Hustlee3 days ago
Final Answer :
A
Explanation :
Investing in monitoring can be effective in deterring shirking by employees, especially when the cost of monitoring is relatively low compared to the potential benefits in terms of increased productivity or reduced misconduct. This approach can be particularly useful in situations where other forms of motivation such as incentives or moral appeals may not work as well. Additionally, if monitoring is inefficient, it may be necessary to invest more in monitoring technology or personnel to achieve the desired level of oversight.
Learning Objectives
- Understand the significance of surveillance and rewards in reducing risks associated with employee moral hazard.