Each year, public schools are rewarded with bigger budgets for achieving a rating of “excellent” or “recommended” and are punished for rating “ needs improvement”.These ratings are based on meeting thresholds on a broad set of measures such as attendance rates, graduation rates, standardized test scores, SAT scores, and so on. Discuss the incentives for school principals (who are the agents, in this case) under this scheme and how you might improve them.
Assignment: Dealing with Risk, Asymmetric Information, and Incentives
Due Week 9 and worth 310 points
Earlier in the quarter we discussed Southwest Airlines’ use of game theory to create new strategy. Continue to research Southwest Airlines or a company of your choice and write a six to eight (6-8) page paper in which you:
- Evaluate a company’s recent (with in the last year) actions dealing with risk and uncertainty.
- Offer advice for improving risk management.
- Examine an adverse selection problem your company is facing and recommend how it should minimize its negative impact on transactions.
- Determine the ways your company is dealing with the moral hazard problem and suggest best practices used in the industry to deal with it.
- Identify a principal-agent problem in your company and evaluate the tools it uses to align incentives and improve profitability.
- Examine the organizational structure of your company and suggests ways it can be changed to improve the overall profitability.
- Use at least five (5) quality academic resources in this assignment. Note: One of your references regarding your should have been published within the last 6 months. Note: Wikipedia does not qualify as an academic resource.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Answer preview
Lastly, to improve risk management, the airline can opt to train all its employees and managers on the issues to do with risk management and how they can handle them. Having people that are well trained and equipped to deal with risks can be the most useful thing for the airline. Because it may be impossible to prevent all risks from happening, having people that know how to deal with them when they occur can be very useful. The risk is likely to be dealt with quickly, and this will help the company avoid damages and many other problems that could develop. In this case, the risk management can be taught to managers when dealing with financial risks it the airline and crews when dealing with safety risks for the passengers.
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