Asked by Swastik Mishra on Sep 24, 2024
Verified
Monitoring
A) Gives the principle a better performance evaluation metric
B) Allows the principle to better align the incentives of the agent with the goals of the principle
C) Can be costly for the principal
D) All of the above
Monitoring
The act of observing, checking, and keeping a continuous record of a process or quality over a period of time.
Principle
A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.
Performance Evaluation
The process of assessing the performance of employees, systems, or organizations against predefined standards.
- Understand the role of monitoring and its significance for the principal in assessing and motivating the performance of agents.
Verified Answer
HF
Hanis Farhana5 days ago
Final Answer :
D
Explanation :
Monitoring provides a better performance evaluation metric for the principal, as it allows them to keep track of the agent's actions and outcomes. It also helps to align the incentives of the agent with the goals of the principal, as the agent knows they are being watched and may be rewarded or penalized accordingly. However, monitoring can be costly for the principal since it requires resources and time to ensure that the agent's behavior is being observed accurately. Therefore, all the options (A, B, and C) are correct.
Learning Objectives
- Understand the role of monitoring and its significance for the principal in assessing and motivating the performance of agents.