Regardless of what policies a manager creates, it is unlikely that the manager can completely solve the principal- agent problem.

Question

Quizplus · Accepted Answer

The principal-agent problem is inherent in any hierarchical organization, where there is a difference in interest between the principal (owner) and the agent (employee). No matter what policies a manager creates, it is impossible to entirely eliminate the conflict of interest between the principal and agent. However, the manager can try to reduce the problem by designing incentive mechanisms and monitoring systems to align the interests of the principal and agent.

Regardless of What Policies a Manager Creates, It Is Unlikely