Unformatted text preview: express itself in ways as seemingly innocuous as the office thermostat. Below is a recent paper discussing energy usage stemming from the PA problem. In this example, the relationship is assumed to be tenant-owner rather than executive-shareholder, but on the bottom of page two is a line that neatly sums up the likelihood of the existence of a PA problem: “A PA problem may exist whenever the payer is not the same agent as the decision-maker or the user. ” http://escholarship.org/uc/item/6p1525mg When reading, keep in mind the powerful incentive effects of the disconnect in objectives....
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- Spring '11
- Economics, RJR Nabisco, Bram Gallagher, PA problem