One way a manager can reduce an agent's risk is to tie:
A) penalties more closely to the agent's effort.
B) bonuses more closely to the agent's sales.
C) rewards more closely to the actions that the agent can control.
D) pay directly for past performance.

Question

Quizplus · Accepted Answer

Tying rewards more closely to the actions that the agent can control reduces the agent's risk because it ensures that their compensation is based on factors within their control, rather than external factors such as market conditions or the behavior of other agents. This incentivizes the agent to focus on the actions they can control and perform to the best of their abilities.

One Way a Manager Can Reduce an Agent's Risk Is