In the presence of asymmetric information, a contingent contract
A) achieves production efficiency.
B) can lead to opportunistic behavior on the part of the agent.
C) is impossible to write.
D) will result in the principal earning all of the profit.
B
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The basic economic problem is
a. how to become wealthy b. how to save the planet from pollution c. how to equally distribute income d. meeting people's wants and needs in a world of scacity
Refer to the graph below. If currency traders think the European economy will experience a recession and the U.S. economy will not, then this event will most likely cause the:
Assume that U.S. and European governments adopt a system of flexible exchange rates, and the figure below shows the market for euros.
A. Euro to appreciate
B. Euro to depreciate
C. U.S. dollar to depreciate
D. The supply of euros to decrease
Financial innovations can have the effect of
A) only decreasing the demand for money. B) only increasing the demand for money. C) either increasing or decreasing the demand for money depending on what the innovation is. D) increasing the Fed's monetary policy.
In the market for insurance, low risk customers are not served because
a. They do not like buying insurance b. They are more costly to serve c. Products designed to be attractive to them are also attractive to high risk types. d. All of the above