What Is the Problem of Control? What Is a Principal-Agent

question 23

Essay

What is the problem of control? What is a principal-agent game? Using an example, explain how these terms relate to the study of bureaucracy? Based on your answers, why is it that attempts at reforming the bureaucracy in order to increase its efficiency usually have a minor impact?

---

Definitions:

Cost of Goods Sold

Cost of Goods Sold (COGS) is the direct costs attributed to the production of the goods sold by a company, including the cost of materials and labor.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its usage and wear and tear.

Direct Financing Leases

A type of lease where the lessor accounts for the asset as a receivable at an amount equal to the net investment in the lease.