In Situations Where There Is a Potential for Moral Hazard,the

Multiple Choice

In situations where there is a potential for moral hazard,the increased efficiency achieved through incentive schemes is:

A) due to the reduction in resources that are dedicated to observing behavior.
B) not certain, because incentive schemes can also create costs.
C) easily achieved because incentive schemes are easy to design and yield predictable results.
D) controversial because it usually comes at the expense of equity.