Unformatted text preview: costs of the largest eaters and then offer deals for other customers such as being able to fill a smaller plate for a lower price. b. A restaurant owner hires a manager who promises to work long hours. When the owner is out of town, the manager goes home early. This action results in lost profits for the firm. Incentive Problem: Post-contractual information problem. The manager promises to work hard, but once the owner is not around to monitor her, she shirks. Potential solutions include: • providing incentive compensation (for example, a profit-sharing plan), and • increased monitoring....
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This note was uploaded on 08/22/2011 for the course ACCOUNTING 201 taught by Professor Stevejoseph during the Winter '11 term at Aarhus Universitet.
- Winter '11