(Solved):Shirking. Discuss the problem of moral hazard in this case and how the firm can try to control it. Is there a possibility that the worker can “game the system” and defeat the employer effort to con… View Answer…

 

Question

Shirking. Discuss the problem of moral hazard in this case and how the firm can try to control it. Is there a possibility that the worker can “game the system” and defeat the employer effort to control shirking?

 

EXPERT ANSWER

Moral hazard occurs when one party knows that the cost of their mistakes will be paid by another party. They are mostly experienced when two parties come into an agreement. Both parties

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