Question

Christopher works for Ocean Media Inc., a large corporation. His work requires him to travel extensively and, as a result, he spends much time working remotely. Taking advantage of the situation, Christopher often works on personal projects instead of company projects. Ocean Media has difficulty checking on Christopher's work because he has no supervision in many of the places where he travels. This scenario exemplifies a(n) _______.A. moral hazard.
B. inverse selection.
C. poison pill.
D. outside director.

Answer 1

Answer:

A. moral hazard

Explanation:

Based on the information provided within the question it can be said that this scenario is perfectly exemplifying the term known as a moral hazard. This refers to when an individual takes more risks because someone else is bearing the costs. Such as in this scenario, Christopher is an employee and should be working on company tasks but instead works on his own projects because the company cannot check up on him, which is morally wrong and he can get fired for it.