To induce an agent to work hard, a principal may offer the agent a bonus, in other words, an extra payment if a performance target is hit. Suppose that the agent's performance is affected by factors beyond the agent's control, for example umbrellas are demanded more on a rainy day. Under what conditions may the bonus not induce the agent to work harder?
A) The agent is very risk averse.
B) The agent is very risk loving.
C) The agent is risk neutral.
D) The principal is risk neutral.
A
Economics
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Refer to Figure 14.2. Suppose that, due to a recession, foreign workers begin to leave the United States to search for work in their home countries. Other things equal, this would best be represented in the United States by a movement from
A) point A to point B. B) point B to point A. C) point B to point C. D) point A to point C.
Economics
What do economists mean when they characterize households and firms as forward looking?
What will be an ideal response?
Economics