Question from Past Microeconomics Qualifying Exam[]

Fall 2000 - Section I, Question six, George Mason University

True, False, Uncertain. Determine whether or not each of the following statements are true or false. Explain your reasoning briefly in a paragraph or two. (The explanation is often more important than the answer given). Include a carefully labeled diagram or game matrix if it helps to clarify your answer.

In principal-agent framework where effort is unobservable, the agent exerts ineffciently low effort.


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