The principal's goals are NOT in line with the goals of:
A) any other principal.
B) the agents.
C) the firms.
D) the consumers.

Question

Quizplus · Accepted Answer

The principal-agent problem arises when the goals of the principal (e.g., an owner or shareholder) are not aligned with the goals of the agents (e.g., managers or employees) who are supposed to act on the principal's behalf. This misalignment can lead to issues such as moral hazard and adverse selection.

The Principal's Goals Are NOT in Line with the Goals