The principal-agent problem arises because the agent's objectives differ from those of the principal.

Name: The principal-agent problem arises because the agent's objectives differ from those of the principal.
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The principal-agent problem is a result of the agent acting in their own self-interest, which may not align with the goals of the principal (who is typically the owner or shareholder of the company). This creates a conflict of interest between the two parties.

The Principal-Agent Problem Arises Because the Agent's Objectives Differ from Those