The Principal-Agent Problem Arises Primarily Because

question 41

Multiple Choice

The principal-agent problem arises primarily because

• A) principals and agents share a common interest, leading to free-rider problems.
• B) principals and agents are in an adversarial role, sharing no common interests.
• C) principals pursue some of their own objectives, which may conflict with the objectives of the agents.
• D) agents pursue some of their own objectives, which may conflict with the objectives of the principals.

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