The Simple Analytics of the Principal-Agent Incentive Contract
- 1 January 1989
- journal article
- other
- Published by Taylor & Francis in The Journal of Economic Education
- Vol. 20 (1) , 39-51
- https://doi.org/10.1080/00220485.1989.10844610
Abstract
Traditional teaching assumes that firms are run by owner-managers. In fact, ownership and management are frequently separated, and a conflict of interests may exist. The principal-agent literature is applied to this problem in a simple form useful for the introductory economics course.Keywords
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