The principal-agent problem:
A)is commonly seen in the employer-employee relationship.
B)is when the principal has less information than the agent.
C)is the source of incentive for employees to slack off.
D)All of these statements are true.

Question

Quizplus · Accepted Answer

The principal-agent problem involves situations where the agent (e.g., employee) may not act in the best interest of the principal (e.g., employer) due to differing goals and information asymmetry, leading to potential issues like slacking off.

The Principal-Agent Problem