Agency theory is concerned with solving one or two issues that can happen within the department relationships

Agency theory is concerned with solving one or two issues that can happen within the department relationships

The very first is the brand new department disease one comes up when (a)the latest wants or specifications of one’s dominating and you will broker disagreement and you can (b) it is difficult or costly to your principal to verify just what the fresh broker is actually undertaking. The challenge here is your dominating cannot check if the agent provides behaved rightly. The second is the situation out-of risk discussing one to pops up whenever the principal and you will representative has actually other perceptions towards the chance. The issue listed here is that prominent therefore the broker get like other actions because of the some other chance choices.

g., self-desire, bounded rationality, chance aversion), communities (age.g., purpose argument one of participants), and you will advice (e.g., info is a commodity which can be purchased). Particularly, issue will get, Are an actions-established offer (age.g., salaries, hierarchical governance) better than just a consequence-built offer (age.g., income, commodity, transfer away from assets rights, market governance)? An introduction to agency theory is provided for the Table step one.

The new agencies structure applies in a variety of configurations, ranging from macrolevel things such as for instance regulatory rules so you’re able to microlevel dyad phenomena such as for instance blame, perception management, sleeping, and other phrases out of selfinterest. Read more