Which of the following is an example of the principal-agent problem at work? Cynthia pursues a less healthy lifestyle because of the excellent health insurance provided by her employer Sam gets a diagnosis that will require expensive medical treatment but hides this information from the agent in order to obtain less expensive insurance Anthony drives a little more dangerously because the vehicle has an anti-crash system that will help prevent accidents A couple hires a babysitter to watch their child while they're away. The babysitter fails to properly supervise. Instead, he or she watches television in a separate room.

Which of the following is an example of the principal-agent problem at work? Cynthia pursues a less healthy lifestyle because of the excellent health insurance provided by her employer Sam gets a diagnosis that will require expensive medical treatment but hides this information from the agent in order to obtain less expensive insurance Anthony drives a little more dangerously because the vehicle has an anti-crash system that will help prevent accidents A couple hires a babysitter to watch their child while they're away. The babysitter fails to properly supervise. Instead, he or she watches television in a separate room.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter20: The Problem Of Adverse Selection Moral Hazard

Section: Chapter Questions

Problem 5MC

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