Problem
After a probationary period of six years, during which they teach, research, and serve on committees, university professors who meet acceptable standards are given tenure. Tenure offers these professors tremendous job security.
a. Explain why a tenure system makes universities susceptible to a moral hazard problem.
b. Explain why the problems of moral hazard caused by tenure are likely to be greater than the problems of adverse selection.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.