The principal-agent problem arises because of

Question

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The principal-agent problem arises because of hidden actions, which occur when an agent has private information or incentives that are misaligned with the goals of the principal. This can lead to the agent taking actions that benefit themselves at the expense of the principal, causing a conflict of interest. Natural selection and diminishing marginal returns are unrelated to the principal-agent problem, and the winner's curse and hidden characteristics can be factors in certain situations, but are not the primary cause of the problem.

The Principal-Agent Problem Arises Because of