Multiple Choice
A principal-agent problem can arise when
A) a principal hires an agent to do something on their behalf, but the principal cannot perfectly observe the agent's actions.
B) an agent hires a principal to do something on their behalf, and the agent can observe the principal's actions.
C) an insurance agent sells a policy to a buyer who uses it as an incentive to behave badly.
D) a principal uses an agent to accomplish a task the principal wants credit for completing.
Correct Answer:
Verified
Correct Answer:
Verified
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