A worker knows more than his employer about how much effort he puts into his job.This is an example of
A)a hidden action.
B)a hidden characteristic.
C)adverse selection.
D)the Condorcet Paradox.

Question

Quizplus · Accepted Answer

This is an example of a hidden action because the employer cannot observe or monitor the exact amount of effort the worker is putting into his job. The worker has private information about his effort level and the employer may not know if the worker is slacking off, working hard or putting in extra effort.

A Worker Knows More Than His Employer About How Much