Talk:Principal–agent problem/Archives/2015

This page is an archive of past discussions. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page.

§ removed in its entirety

Stuff below is stupid, redundant, restating the obvious thesis in a tone inappropriate for current wiki standards, etc. Lycurgus (talk) 16:09, 14 June 2010 (UTC)

Problems and limitations

The double-sided principal–agent problem (a model of corruption)

One limitation with the application of principal–agent theory is that the agent can also try to incentivize the principal. This is sometimes referred to as the double-sided principal–agent problem or sometimes more commonly as

corruption

.

One example, may be in the area of takeovers and top executive compensation:

^[

window dress

their company's earnings forecasts). There are typically very few legal risks to being 'too conservative' in one's accounting and earnings estimates.
^[
firesale that can sometimes be in the 100s of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation
of being very generous to parting top executives).
^[
asymmetric information
, policy makers and the general public see a government owned firm that was a financial 'disaster'—miraculously turned around by the private sector (and typically resold) within a few years.

Retrieved from "https://en.wikipedia.org/w/index.php?title=Talk:Principal–agent_problem/Archives/2015&oldid=853734930"