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Principal and Agent

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Abstract

The principal-agent literature is concerned with how one individual, the principal (say an employer), can design a compensation system (a contract) which motivates another individual, his agent (say the employee), to act in the principal’s interests. The term principal-agent problem is due to Ross (1973). Other early contributions to this literature include Mirrlees (1974, 1976) and Stiglitz 1974, 1975).

Keywords

  • American Economic Review
  • Moral Hazard
  • Expected Utility
  • Compensation Scheme
  • Indifference Curve

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© 1989 Palgrave Macmillan, a division of Macmillan Publishers Limited

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Stiglitz, J.E. (1989). Principal and Agent. In: Eatwell, J., Milgate, M., Newman, P. (eds) Allocation, Information and Markets. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20215-7_25

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