Principal-agent theory assumes all of the following EXCEPT that ______.
A) work provides rewards
B) individuals are self-interested
C) officials and workers operate through contracts
D) bureaucrats are irrational

Question

Quizplus · Accepted Answer

Principal-agent theory assumes that bureaucrats are rational actors who seek to maximize their utility or self-interest. Therefore, option D, which suggests that bureaucrats are irrational, is not consistent with this assumption. Options A, B, and C are all consistent with the assumptions of principal-agent theory.

Principal-Agent Theory Assumes All of the Following EXCEPT That ______