A real estate agent who is paid on a contingency fee may not reduce moral hazard as well as a lawyer paid on a contingency fee because:
A) the lawyer is bound by an oath to represent her client well.
B) the real estate agent's contingency fee is based on time to sale completion.
C) the real estate agent's payment is smaller, therefore he may not wait for the best offer on his client's house.
D) the lawyer's job takes much longer to complete, therefore she will work harder.

Question

Quizplus · Accepted Answer

A real estate agent's payment is typically a percentage of the sale price, which might incentivize them to close a deal quickly rather than waiting for the best possible offer, potentially leading to moral hazard.

A Real Estate Agent Who Is Paid on a Contingency