Abstract
We illustrate agency problems with the aid of heavily stripped-down models which can be explicitly solved. Variations on a principal–agent model with both actors risk-neutral allow us to illustrate a canonical benchmark case, multi-tasking problems and informed-principal ones. We illustrate intertemporal agency problems using a two-period model with a risk-averse agent, which yields linear incentives. We conclude by briefly looking at more recent developments of the field such as present-biased preferences and motivated agents.
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Anderlini, L., Felli, L. (2018). Agency Problems. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2773
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2773
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