Talk:Principal–agent problem/Archives/2012

August 2008

Early History

TRUST AND INCENTIVES IN AGENCY RAMON CASADESUS-MASANELL DANIEL F. SPULBER

Southern California Interdisciplinary Law Journal Volume 15, Number 1, Fall 2005

Page 95

Perhaps the earliest version of the principal-agent model was given by Marvin Berhold (--Angela.kalyta (talk) 17:54, 10 February 2012 (UTC)reference?), who anticipated many of the major theoretical results in agency theory. He also incorporated earlier work on wage incentive systems and labor unions. In Berhold’s framework, a principal designs incentives to motivate an agent to make an “appropriate decision.” He restricts his attention to linear profit-sharing incentives composed of a fixed reward and sharing ratio. Berhold derives the contract that maximizes the principal’s profit such that the agent will accept the contract and the agent will make a decision based on the contract. Assuming that both the principal and the agent are risk averse, Berhold identifies the interaction between risk-sharing and performance incentives for the agent. solution the pricipal-agent problem

67.33.138.42 (talk) 16:33, 6 August 2008 (UTC) I wonder why Jensen and Meckling are not presented in the article.

--Angela.kalyta (talk) 17:54, 10 February 2012 (UTC) I agree - from what I understand, Jensen and Meckling (1976) is seminal, as is Berle and Means (1932)" 'The Modern Corporation and Private Property (book)' Seems a history section could address everyone's comments here: bring together seminal authors and could include the evolution of off shoots from different disciplines, to incorporate Galileo Galilei's and derryp's concerns. Any one know enough to do it?

Galileo Galilei 17:41, 11 March 2007 (UTC): I think this article should give a general overview of the Principal / Agent problem and other articles would more deeply explain different subsections. There is a whole branch of finance devoted to this problem (corporate governance) and I'm sure other scientific area's also have lots and lots of information and theory regarding this subject. To mee it seems that this article doesn't offer any finance related theory at all...

This article needs more work ( unfortunately I dont know enough to do it myself). It also seems odd there are no mentions of coase, mirrlees and vickery .... who is this candice pendergeist bloke? should I have heard of him? (im not a microeconomist but I would have thought his name would ring a bell if he is a seminal as this article implicitly suggests) cheers for any insights- derryp

"Hiddens"

I think that the various hidden problems should be added to also decribe sources of problems in PA-relations.

hat about principal-agent problems in relation to Healthcare Economics with third party payers?

PA problem in energy efficiency

Dear economists (which I am not),

I work in environmental/energy policy and was frustrated that no term existed to describe the ubiquitous economic problem when the person investing in energy savings is not the person benefiting from them, and thus the investment is not made. I was then more frustrated to find out that in fact a term does exist and is used: the principal-agent problem - but that this term has an alternate traditional description in economics, which does not match the landlord tenant problem.

Anyway, I wrote a section describing the use of the term as it stands. Let me know what you think!

Jujubeberry 18:47, 18 July 2007 (UTC)

It seems to me that there is an information component: The buyers choose the landlord that will supply them the house based on information about the residential service he will be providing, but an important detail, the cost of energy over the year, is generally not included in the transaction. This is because of the quality of information available: To judge efficiency you must know both the energy input and the human-usable output, such as the temperature profile over the year. So this surely is a straight forward principle-agent problem, but where the agent is responsible for his own monitoring, as he would be the one who decided whether there were thermostats, and where they went. 81.103.167.149 04:02, 4 December 2007 (UTC)

There can be an information component to the landlord-tenant problem, but there does not have to be. Even if both parties are fully informed of the performance of the building, there is still no incentive for the landlord to make an efficiency investment, since the benefit would go to the tenant. This is considered a market barrier if the efficiency investment would be globally cost-effective. And I don't think that the tenant would argue much with the landlord based on the energy performance of the building, even if they had all the other information: other criteria are usually much more important, such as location, size, rent. So to me, and to most energy folk, the principal-agent problem is an imbalance in investment and benefits rather than an information issue. The IEA refers to these situations as "split-incentives" and notes in the policy recommendations that information or awareness campaigns are not sufficient to address the problem, which instead requires regulatory or contractual structure modifications.

Jujubeberry (talk) 13:54, 22 January 2008 (UTC)

Direction

I am a little perplexed as to the direction this article has taken. The Principal-Agent Problem has vastly been studied in economics and appears to me to be looked at differently. For example, there is a far greater amount of modelling where signalling and competitive screening are involved and I didn't see any of that mentioned here (see Jen-Jacques Laffont & David Martimort) Canking 16:38, 24 September 2007 (UTC)

References

I would question the validity of this reference Justin Hawkins, David Blaine, Daniel Nielson, and Tommy Tiernan, 2006. Delegation and Agency in Internaitonal Organizations. Cambridge University Press. I would actually question the existence of this reference —Preceding unsigned comment added by 89.100.96.204 (talk) 14:21, 7 May 2008 (UTC)

Is this not a theory developed by Milgram? -TDF- —Preceding unsigned comment added by 82.25.3.129 (talk) 23:43, 15 May 2008 (UTC)

Reference structure

This article would be easier to read if references were structured as shown here —Preceding unsigned comment added by Vrefron (talk • contribs) 22:33, 26 August 2008 (UTC)

Lacking a definition

The article does not clearly define the concept. The first sentence is vague, speaking of "difficulties," and doesn't explain what these difficulties are. Subsequent sentences talk about attempts to "align the interests of the principal with the agent," which suggests that the problem was that the interests were not aligned in the first place, although this is not explicit. Moreover, why should we expect them to be aligned? As a newcomer to this subject, I don't understand the problem. —Preceding unsigned comment added by Ezrakilty (talk • contribs) 11:25, 28 April 2009 (UTC)

Reads Like a Post-Grad Paper

This article, in the eyes of a layman, appears to be thoughtfully compiled and edited (not counting the wonderful points made in the sections above). It is written like a thesis paper though, using citations to justify arguments and lead the reader along a path. Please re-write this article so that it reads at a more vernacular level, in a style more like an encyclopedic article. 76.111.8.135 (talk) 22:06, 12 September 2009 (UTC)

I concur, this is supposed to be an encyclopedic article, not an in-depth analysis. [RKB] — Preceding unsigned comment added by Rkb100100 (talk • contribs) 17:02, 11 December 2012 (UTC)

name

maybe i'm dumb but shouldn't that be a slash and not a hyphen in the term —Preceding unsigned comment added by 65.107.1.165 (talk) 20:06, 3 October 2009 (UTC)