HC - Principal Agent Problem [Recovered]

HC - Principal Agent Problem [Recovered] - PowerPoint Only...

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Unformatted text preview: PowerPoint Only Principals Individuals attempting to influence the agent into engaging in specific behavior  Agents Individuals that have their own utility functions that may or may not correspond with that of the principal  Principals and agents are self-interested They want to maximize their own utility (value)  Principal and agent interests are not inherently consistent An insurance company wants the consumer to drive carefully or take care of their health  Corporations want to maximize profits and may or may not have ethical standards. The government is trying to deter illegal behavior by corporations  An employer who is trying to ensure adequate effort from its employees. Employees want to maximize utility which in part includes working as little as they can The agent would like to maximize the value they receive from their employment...
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HC - Principal Agent Problem [Recovered] - PowerPoint Only...

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