Differentiate between outcome-oriented contracts and behavior-based contracts.

Expert Solution

Agency relationship is the relationship which consists of performance-based contracts. These performance-based contracts are of two types: Outcome based contracts and behavior-based contracts.

outcome-oriented contracts	behavior-based contracts
The outcome-oriented contracts are the contracts which focuses on the mainly the outcomes or results.	Behavior based contracts mainly focusses on the activities for the progress on the work.
The results are specified before the contract.	The results are not specified here before signing the contract.
Either of the parties of the contract may lose or gain due to ignorance of complete information.	The one party always in benefit as they have the complete information.
The process, way or procedure is less important here.	The process, way and procedures are more important here.
Here one party has more liability than other.	In this case, both the parties are equally liable for the gains and losses.
The risk sharing and outcome measurement has been done here.	Behavioral cost only has been measured.

keosha answered 1 year ago

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