What is one way to avoid the principal-agent problem in the workplace?
A)The employee constantly monitors the employer's activities.
B)The employer constantly monitors the employee's efforts.
C)The employer shares all management choices with employees before making decisions.
D)The employee signs a waiver of release.

Question

Quizplus · Accepted Answer

The principal-agent problem occurs when there is a conflict of interest between a principal (employer) and an agent (employee), typically due to the agent having more information or different incentives. One way to mitigate this issue is for the employer to monitor the employee's efforts, ensuring that they align with the company's goals.

What Is One Way to Avoid the Principal-Agent Problem in the Workplace