The S&L Crisis can be analyzed as a principal-agent problem. The agents in this case,the ________,did not have the same incentive to minimize cost to the economy as the principals,the ________.

Question

Quizplus · Accepted Answer

Politicians and regulators were the agents and taxpayers were the principals in the S&L crisis. The politicians and regulators did not have the same incentive to minimize cost to the economy as the taxpayers, who ultimately bore the cost of the crisis.

The S&L Crisis Can Be Analyzed as a Principal-Agent Problem