ECON 313- chap4

ECON 313- chap4 - Agency costs Costs of monitoring managers...

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Agency costs – Costs of monitoring managers and other employees (called agents, but in a slightly diff. sense than its usual definition of independent economic actors) and of designing and implementing schemes to ensure compliance or provide incentives to follow the wishes of the employer. Agent – an economic actor, usually a firm, worker, or consumer, but possibly a government official, that chooses actions so as to maximize an objective. Asymmetric information – a situation in which one party to a potential transaction (often a buyer, seller, lender, or borrower) has more information than another party. Big Push – a concerted, economy-wide, and probably public policy-led effort to initiate or accelerate economic development across a broad spectrum of new industries and skills. Complementarity – when complementarities are present, an action taken by one firm, worker, or organization increases the incentives for other agents to take similar actions. Complementarities often involve investments whose return depends on other investments being made by other agents. Congestion – the opposite of a complementarity; an action taken by one agent that decreases the incentives for
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This note was uploaded on 10/09/2010 for the course ECON 313 taught by Professor Iforget during the Spring '10 term at McGill.

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ECON 313- chap4 - Agency costs Costs of monitoring managers...

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