Solutions to moral hazard include:
A)offering salespeople in stores a straight salary rather than a commission on sales.
B)setting up many stores and restaurants that are part of a national chain as franchises,with the owner undertaking quite a lot of risk.
C)allowing property owners to over insure their buildings.
D)diversification.

Question

Quizplus · Accepted Answer

Franchising aligns the incentives of the owner with the business's success, reducing moral hazard by having the owner bear some risk and responsibility for the business's performance.

Solutions to Moral Hazard Include