In the economic literature on principal-agent problems, the ________ is the person who takes some action, and the ________ is the person whom the action affects.
A) agent; principal
B) principal; agent
C) Both statements describe the agent.
D) Both statements describe the principal.

Question

Quizplus · Accepted Answer

In principal-agent problems, the agent is the person who takes some action, and the principal is the person whom the action affects. Therefore, choice A correctly identifies the agent and principal roles.

In the Economic Literature on Principal-Agent Problems, the ________ Is