In the principal-agent problem,the principal is:
A)a person who entrusts someone with a task.
B)a person who carries out a task on someone else's behalf.
C)a person who is in charge of an educational system.
D)a person who is the source of the problem.

Question

Quizplus · Accepted Answer

In the principal-agent problem, the principal is the person who entrusts someone (the agent) with a task to be carried out on their behalf. The problem arises due to the asymmetry of information and conflicting interests between the principal and the agent.

In the Principal-Agent Problem,the Principal Is