Principal-Agent Theory

Published by Mario Oettler on

Last Updated on 28. April 2023 by Martin Schuster

The principal-agent theory assumes that actors don’t have all the information available to decide. This means that this information is either missing or there is insufficient neuronal capacity to process all available information.

The principal-agent theory comprises three main problems:

  • Hidden characteristics
  • Hidden information/ hidden action

Hidden intentions

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