In a very basic principal-agent model,output is contractible if:
A)it can be observed with some positive cost.
B)the employee produces many products.
C)the employee works in a team.
D)the employee works independently and cannot game the performance measure.

Question

Quizplus · Accepted Answer

Output is contractible if it can be observed and verified without ambiguity, ensuring that the employee cannot manipulate the performance measure.

In a Very Basic Principal-Agent Model,output Is Contractible If