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Chapter 5: Q. e - For Critical Thinking (page 115)

Why do representatives of taxpayers who fund the NSLP program experience more difficulties in designing effective incentive structures for officials who manage that program than does a company's shareholders who seek to change the incentives confronting firms' managers?

Short Answer

Expert verified

They face greater difficulty because the managers are entitled to incentives depending on their working.

Step by step solution

01

Step 1. Given Information.

The objective is to explain the difficulties faced by representatives of the NSLP program.

02

Step 2. Reason.

The taxpayers have more difficulty in designing effective incentive structures because they also have children who are enrolled in the program and therefore the incentives to be provided are not the same for every manager.

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