A typical reason moral hazard arises in the workplace is:
A) employees do not directly benefit from their effort, only their time spent at work.
B) employees get paid the same, whether they try really hard or not.
C) employees have no incentive to let the employer know how hard they can really work, because that might be expected of them all the time.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

All of these statements are true and contribute to the emergence of moral hazard in the workplace. If employees do not directly benefit from their effort, only their time spent at work, they may not feel motivated to put in extra effort. If employees get paid the same whether they try really hard or not, they have no incentive to work harder. Similarly, if employees have no incentive to let the employer know how hard they can really work because that might be expected of them all the time, they may not be willing to put in extra effort. These factors can lead to moral hazard, where employees may not work as hard as they could because they do not directly benefit from their effort.

A Typical Reason Moral Hazard Arises in the Workplace Is