In principal-agent relationships,_____ describes the difficulty of principals to ascertain whether agents have really put forth their best efforts.

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Moral hazard describes a situation in which information asymmetry increases the incentive of one party to take undue risks or shirk other responsibilities because the costs incur to the other party. In the principal-agent relationship, moral hazard describes the difficulty of the principal to ascertain whether the agent has really put forth a best effort.

In Principal-Agent Relationships,_____ Describes the Difficulty of Principals to Ascertain