What are correct incentives designed to eliminate?
What will be an ideal response?
Correct incentive design can improve the selection mechanism along with reducing the moral hazard problem.
You might also like to view...
The economic functions of the government deal with
A) discouraging smoking in youths. B) making sure supply equal demand. C) promoting economic efficiency. D) excess demand.
What property of the von-Neumann Morgenstern utility function is related to risk aversion?
a. Its upward slope b. Its downward slope c. Its convexity d. Its concavity
For which type of job would you expect to see a compensating differential?
a. An accountant. b. A police officer. c. A senator. d. A tele-marketer.
If the price of a good shown on the vertical axis of a budget graph is cut in half and the price of the good on the horizontal axis is cut by 75%, then the budget constraint shifts
A. right and becomes steeper. B. left and becomes steeper. C. right and becomes flatter. D. left and becomes flatter.