In political science and economics, the principal–agent problem or agency dilemma treats the difficulties that arise under conditions of incomplete and asymmetric information when a principal hires an agent, such as the problem of potential moral hazard and conflict of interest, inasmuch as the principal is—presumably—hiring the agent to pursue its, the principal's, interests.

The underlying view of mankind is that managers are:
* Lazy
* Acting in self interest
* Risk avoiding

Shareholders are:
* Risk neutral
* Want to maximize share holder value

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Part of [[M9-S3 - Costs of organizations]]
See also: http://en.wikipedia.org/wiki/Principal-agent_problem
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finance_public
created
Sat, 08 Oct 2011 08:20:43 GMT
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dirkjan
modified
Sat, 08 Oct 2011 08:20:43 GMT
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dirkjan
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M18
M9
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creator
dirkjan