Asked by Tyler Jones 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 fail to respond to incentive contracts
D) when incentives solve both moral hazard and adverse selection problems with employees
Shirking
The act of avoiding or neglecting responsibilities, especially in the workplace, leading to reduced productivity or performance.
Incentive Contracts
Contracts that provide rewards for performance above a certain standard, encouraging higher levels of effort or achievement.
Monitoring
The process of supervising activities or individuals to ensure compliance, performance, or progress towards objectives.
- Acknowledge the value of implementing monitoring and incentives to lessen the occurrence of moral hazard within the workforce.
Verified Answer
AE
Amanda Evans3 days ago
Final Answer :
C
Explanation :
When employees fail to respond to incentive contracts, it may be necessary to invest in greater monitoring to ensure they are not shirking. This can help to address the moral hazard problem where employees have little incentive to work hard if they know they can slack off without consequences. However, if monitoring is expensive relative to its benefits or not very efficient, it may not be the best solution. Similarly, if incentives alone can solve the problem, there may be no need for additional monitoring.
Learning Objectives
- Acknowledge the value of implementing monitoring and incentives to lessen the occurrence of moral hazard within the workforce.