Agency problems occur when:
A) there is no information.
B) both parties have identical information.
C) both parties have limited information.
D) one party in a transaction has information that the other party does not possess.
E) information costs are zero.

Question

Quizplus · Accepted Answer

Agency problems occur when one party in a transaction has information that the other party does not possess. This information asymmetry can create conflicts of interest and divergent objectives between the parties, leading to agency problems.

Agency Problems Occur When