1.
a) Although there is not asymmetric information, the manager of a company could
act opportunistic with their workers because of his/her job position, since this
person dictate what to do and workers have to respond to these orders if they do
not want to have business problems. What is more, it has to be taken into account
that the contract signed by employees is created by the company, which means
that can be slightly manipulate (incomplete) to take advantage of it. However,
considering that there is symmetric information and, therefore, the contract is
complete, and everyone knows what they are agreeing, just for the fact of having
more control and power, the manager could act opportunistic.
b) Managers could act opportunistically since, due to their position, there is not
anyone supervising them; therefore, they can do whatever they want. In addition,
taking into account that their utility is maximized when profits are maximized, it is
necessary to minimize costs as wages and to maximize benefits, which requires
the high effort performance of their employees.
c) Managers should consider that by acting opportunistically, they lose the trust of
their employees and this can create a bad work environment, strikes, lawsuits…
And all these aspects will produce a bad image/reputation of the company, leading
into tension, sales reduction, bad reputation and, consequently, reduction in
profits