Asked by Molly Martinez 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 efficient
C) when employees respond well to incentive contracts
D) when incentives solve both moral hazard and adverse selection problems with employees
Shirking
The act of avoiding or evading work and responsibilities, often in employment contexts.
Incentive Contracts
Contracts that promise a certain payback as a result of achieving set performance targets, thereby motivating the involved parties to reach specific outcomes.
Monitoring
The continuous or regular observation and recording of activities or processes for the purpose of ensuring compliance with standards or progress toward objectives.
- Realize the importance of monitoring and incentives in mitigating employee moral hazard.
Verified Answer
CA
Cupcakes are Forever2 days ago
Final Answer :
B
Explanation :
Monitoring is most beneficial when it is efficient, meaning the benefits of monitoring (such as increased productivity and reduced shirking) outweigh the costs associated with implementing such systems.
Learning Objectives
- Realize the importance of monitoring and incentives in mitigating employee moral hazard.