Agency Problems
Living reference work entry
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DOI: https://doi.org/10.1057/978-1-349-95121-5_2773-1
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Abstract
We illustrate agency problems with the aid of heavily stripped-down models which can be explicitly solved. Variations on a principal–agent model with both actors risk-neutral allow us to illustrate a canonical benchmark case, multi-tasking problems and informed-principal ones. We illustrate intertemporal agency problems using a two-period model with a risk-averse agent, which yields linear incentives. We conclude by briefly looking at more recent developments of the field such as present-biased preferences and motivated agents.
Keywords
Agency problems Commitment Common values Continuous-time models Contract theory Discrete-time models First-order approach Incentive design Insurance–incentives trade-off Intertemporal incentives Limited liability Linear incentive schemes Menu contracts Noisy tasks Non-profit organizations Pooling equilibria Principal and agent Separating equilibria Signalling Soft incentivesJEL Classifications
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© The Author(s) 2008