Which of the following statements is correct? a. In a principal-agent model, the party who proposes the contract is called the principal. b. In a principal-agent model, the party who decides whether or not to accept the contract and then performs under the terms of the contract (if accepted) is called the agent. c. In a principal-agent model, the agent is usually the party with asymmetric (or better) information. d. All of the above.
Which of the following statements is correct? a. In a principal-agent model, the party who proposes the contract is called the principal. b. In a principal-agent model, the party who decides whether or not to accept the contract and then performs under the terms of the contract (if accepted) is called the agent. c. In a principal-agent model, the agent is usually the party with asymmetric (or better) information. d. All of the above.
Chapter18: Asymmetric Information
Section: Chapter Questions
Problem 18.12P
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Question
Which of the following statements is correct?
a. |
In a principal-agent model, the party who proposes the contract is called the principal. |
|
b. |
In a principal-agent model, the party who decides whether or not to accept the contract and then performs under the terms of the contract (if accepted) is called the agent. |
|
c. |
In a principal-agent model, the agent is usually the party with asymmetric (or better) information. |
|
d. |
All of the above. |
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