The use of incentive payments for salespeople combats
A) both adverse selection and moral hazard.
B) neither adverse selection nor moral hazard.
C) adverse selection but not moral hazard.
D) moral hazard but not adverse selection.

Question

Quizplus · Accepted Answer

Incentive payments for salespeople can help to combat moral hazard by aligning the interests of the salesperson with the interests of the firm. By providing salespeople with a financial incentive to perform well, the firm can encourage them to put in more effort and to take more risks. This can lead to increased sales and profits for the firm.

The Use of Incentive Payments for Salespeople Combats