The principal-agent problem is a problem
A) of the power system of boss and subordinate where the boss (principal) exerts influence over his subordinates (agents) using punishment or threat.
B) that exists when a person (principal) has more information about the task than the agent he hires to perform the task.
C) caused by agents pursuing their own interests rather than the interests of the principals who hired them.
D) caused by a person (principal) who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way.
C
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Using sharp increases or decreases in taxes rather than deficits is a better way to prevent distortions in an economy
Indicate whether the statement is true or false
In a recession, tax payments tend to increase and transfer payments tend to decrease
a. True b. False
What is the change in the money supply when the Fed purchases $700 worth of bonds and the required reserve ratio is 14 percent assuming banks hold no excess reserves?
Which of the following is one of the necessary conditions for perfect competition?
A. Diminishing utility B. Indivisible setup costs C. No barriers to entry D. Differentiated products