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One variety of moral hazard deals with situations where one individual takes actions that cause other individuals to behave in unwanted and probably unexpected ways.

One variety of moral hazard deals with situations where one individual takes actions that cause other individuals to behave in unwanted and probably unexpected ways. Explain why salary incentives for executives and CEOs based upon aggregate measures such as profits or enrollment often do not generate the behavior that governing boards desire. What can be done to remedy the problems you have identified?

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