If an owner of a store puts a bell on a cash register so that he/she can be informed as to when a sale has been made thereby reducing the chance of the cashier stealing is an example of:

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BlackTom AI · Accepted Answer

The question describes a scenario where an owner installs a bell on the cash register to be alerted when a sale occurs, with the aim of reducing the chance that a cashier might steal. This is a classic example used in agency theory to illustrate monitoring and controls designed to align the interests of the owner (the principal) and the cashier (the agent).

First, consider the underlying problem: the owner delegates control of sales to the cashier, creating an information and incentive gap. The cashier could engage in opportunistic behavior (stealing) because the owner cannot perfectly observe every action. This is the core of the principal-agent problem, where the agent’s actions may not perfectly align with the principal’s interests due to information asymmetry and misaligned incentives.

Second, the specific mechanism—the bell—acts as a monitoring device. By signaling when a sale occurs, it increases the likelihood that irregularities are noticed and deterred, thereby reducing moral hazard and potential losses from theft. This aligns with how principals use surveillance, audits, or incentive structures to curb opportunistic behavior by agents.

Third, if we were to evaluate alternative explanations (even though none are provided in the prompt), we would look for concepts that do not capture the governance dynamic here. For instance, a general description of internal controls without reference to the principal-agent relationship would miss the core dynamic of delegation and accountability. Or, if we described market friction or transaction costs in purely macro terms, we would not be addressing the specific delegation problem between owner and cashier.

In short, the scenario is best understood through the lens of the principal-agent problem, where monitoring (the bell) is used to reduce the agent’s opportunities to act against the principal’s interests. This contrasts with explanations that do not focus on delegation and accountability between principal and agent, which would fail to capture why the bell is a preventive control in this context.

PBPL_001_001_25S Midterm Exam 1

If an owner of a store puts a bell on a cash register so that he/she can be informed as to when a sale has been made thereby reducing the chance of the cashier stealing is an example of:

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PBPL_001_001_25S Midterm Exam 1

If an owner of a store puts a bell on a cash register so that he/she can be informed as to when a sale has been made thereby reducing the chance of the cashier stealing is an example of:

View Explanation

Log in for full answers

Similar Questions

Part 1Asymmetric information in equity contracts is known as the​ ______________ problem because the manager of the firm has fewer incentives to maximize profits than the stockholders might ideally prefer. Part 2 A. debt deflation B. ​principal-agent C. ​free-rider D. adverse selection

Traders working for banks are subject to the ________.

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

Part 1Asymmetric information in equity contracts is known as the ______________ problem because the manager of the firm has fewer incentives to maximize profits than the stockholders might ideally prefer. Part 2 A. debt deflation B. principal-agent C. free-rider D. adverse selection