Quotes About Agency problem

also learned from my losing silver investment that when the interests of the salesmen and promoters differ from those of the client, the client had better look out for himself. This is the well-known agency problem in economics, where the interest of the agents or managers don't coincide with those of the principals, or owners. Shareholders of companies that have been pillaged by self-serving CEOs and boards of directors are painfully familiar with this.

Montaigne also detected the agency problem, or why the last thing a doctor needs is for you to be healthy: "No doctor derives pleasure from the health of his friends, wrote the ancient Greek satirist, no soldier from the peace of his city, etc." (Nul médecin ne prent plaisir à la santé de ses amis mesmes, dit l'ancien Comique Grec, ny soldat à la paix de sa ville: ainsi du reste.)

The agency problem (or principal-agent problem) also manifests itself in the misalignment of interests in transactions: a vendor in a one-shot transaction does not have his interests aligned to yours—and so can hide stuff from you.