In the magazine Budget Travel, a hotel housekeeper admits, "I cut corners everywhere I could. Instead of vacuuming, I found that just picking up the larger crumbs from the carpet would do. Rather than scrub the tub with hot water, sometimes it was just a spray-and-wipe kind of day.... After several weeks on the job, I discovered that the staff leader who inspected the rooms couldn't tell the difference between a clean sink and one that was simply dry, so I would often just run a rag over the wet spots.... I apologize to you now if you ever stayed in one of my rooms." Assume that in addition to the information provided by the maid, the maid got paid a flat hourly wage (which is common for this occupation).

Use our framework for diagnosing and solving principal-agent problems to identify what the source of the problem is, and suggest ways to fix it:

A) What is the bad decision and who is making it?

B) Did the agent have enough information to make a good decision?

C) Did the agent have the incentive to do so? Why or why not?

D) Based on your answers to the questions in part a), propose one potential solution to this principal- agent problem?

E) Discuss any potential shortcomings of your proposed solution in part b), and/or any new problems created as a result of your proposed solution?