A situation in which an entity chooses to rely on another entity to perform a task or service for it but risks not having the task done according to its wishes is sometimes called a(n)

Question

Quizplus · Accepted Answer

The situation described in the question is a classic example of a principal-agent problem, where an entity (the principal) hires another entity (the agent) to perform a task on its behalf but faces the risk that the agent will not act in the principal's best interests. This can occur due to misaligned incentives, information asymmetry, or other factors. The principal-agent problem is ubiquitous in business, government, and other areas where one entity delegates tasks to another. The other answer choices are less relevant or incorrect.

A Situation in Which an Entity Chooses to Rely on Another