When executives presell products at year-end to trigger their annual bonuses even though the deep discounts that they must offer will threaten the price stability of their products for the upcoming year,this is an example of

Question

Quizplus · Accepted Answer

The scenario described in the question is an example of a moral hazard problem, where executives focus on their personal financial gain by preselling products to trigger bonuses, even though this may have negative consequences for the company in the long run. The deep discounts offered to customers to meet their sales targets may destabilize the price of products, and affect the company's profitability and sustainability.

When Executives Presell Products at Year-End to Trigger Their Annual