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Agency Problems

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The New Palgrave Dictionary of Economics

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.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Luca Anderlini & Leonardo Felli

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  1. Luca Anderlini
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  2. Leonardo Felli
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    Anderlini, L., Felli, L. (2008). Agency Problems. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2773-1

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_2773-1

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    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

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