________ describes a situation in which an employee prefers to exert less effort than the effort the owner desires because the employee's effort cannot be accurately monitored and enforced.
A) Goal congruence
B) Moral hazard
C) Performance report
D) Incentive report

Question

Quizplus · Accepted Answer

Moral hazard refers to situations where one party takes more risks because the costs will be borne by another party. In an employment context, it can refer to situations where an employee shirks responsibilities or puts forth less effort because they know they will still receive their salary or wages. This can occur when an employee knows that their effort cannot be accurately monitored or enforced, leading to a misalignment between the owner's desired effort level and the employee's actual level of effort.

________ Describes a Situation in Which an Employee Prefers to Exert