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Consider the moral-hazard problem that arises when a risk-averse manager, whose effort is unobservable, runs a firm on behalf of shareholders.
Explain how the trade-off between incentives and risk prevents the firm from obtaining the fully efficient outcome.
How can the moral-hazard problem be eliminated if effort is observable?
How can the moral-hazard problem be eliminated if effort is unobservable but the manager is risk neutral?
Need the assignment on marketing assignment is about to relaunch a product and prepare the marketing plan for next months.
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