As the probability of detecting shirking increases,the size of the bond necessary to deter shirking
A) also increases.
B) stays the same.
C) decreases.
D) increases at an exponential rate.

Question

Quizplus · Accepted Answer

When the probability of detecting shirking increases, the risk for the employee of losing the bond if they shirk becomes higher. Therefore, a smaller bond is needed to deter shirking because the deterrent effect is stronger with a higher detection probability.

As the Probability of Detecting Shirking Increases,the Size of the Bond