Under a principal/agent relationship, the agent faces high costs of determining whether the principal is actually making efforts to the extent the agent expects.

Question

Quizplus · Accepted Answer

In a principal/agent relationship, it is typically the principal who faces high costs of determining whether the agent is making efforts to the extent the principal expects, due to information asymmetry where the agent has more information about their actions than the principal does.

Under a Principal/agent Relationship, the Agent Faces High Costs of Determining