Hidden actions are a type of _____ that creates moral hazard.
A)risk aversion
B)complement
C)monitoring
D)private information

Question

Quizplus · Accepted Answer

Hidden actions refer to actions taken by an agent that cannot be observed by the principal, and can create a situation of moral hazard where the agent may pursue their own interests instead of those of the principal. Private information is the type of information that is known only to the agent and not to the principal, and is a key factor in creating hidden actions and subsequent moral hazard.

Hidden Actions Are a Type of _____ That Creates Moral