Solved

If an Agent Is Risk Averse and a Principal Is

Question 24

Multiple Choice

If an agent is risk averse and a principal is risk neutral, and if the agent pays the principal a fixed fee,


A) all risk is eliminated.
B) the risk neutral person bears all the risk while the risk averse person bears none.
C) the risk averse person bears all the risk while the risk neutral person bears none.
D) the principal and agent share risk equally.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q5: In the automobile insurance market,adverse selection occurs

Q19: If a principal and agent enter into

Q20: Why would a firm prefer that a

Q21: If a firm can sell essentially the

Q22: Which of the following workers is most

Q23: If bad drivers can usually avoid being

Q25: If information in the market for used

Q28: If a life insurance company does NOT

Q29: A conflict between an owner and a

Q66: If the government provides universal health insurance,what