Asked by Ratna Junaidy on Sep 24, 2024
Verified
To keep employees from shirking,invest in greater monitoring
A) when monitoring is expensive relative to its benefits
B) especially when monitoring is not very efficient
C) when employees respond well to incentive contracts
D) when incentives fail to solve either moral hazard and adverse selection problems with employees
Shirking
The behavior of employees who avoid doing their work or put in less effort than is expected, which can negatively impact productivity.
Incentive Contracts
Agreements that provide additional benefits or compensation to parties who meet or exceed specific performance goals or targets.
Monitoring
The continuous observation and recording of activities or changes in a project or system over time.
- Comprehend the critical role of oversight and incentive systems in diminishing the potential for moral hazard among employees.
Verified Answer
LB
latara barnesabout 17 hours ago
Final Answer :
D
Explanation :
When incentives fail to solve moral hazard and adverse selection problems with employees, it becomes necessary to invest in greater monitoring to ensure that employees are not shirking. This is because shirking can lead to reduced productivity and lower profits for the company, and greater monitoring can help to deter employees from engaging in such behavior. However, monitoring can be expensive and inefficient, so it should be used only when necessary and when the benefits outweigh the costs. Additionally, companies should consider using incentive contracts to encourage employees to work hard and produce high-quality work, as this can reduce the need for monitoring in the first place.
Learning Objectives
- Comprehend the critical role of oversight and incentive systems in diminishing the potential for moral hazard among employees.