Exam (elaborations)
Test 2 - Chapter 4 - Spontaneous Order and the Firm
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With the evolution of large firms came the need of owners to delegate ownership and control to managers. These managers are employed to maximize team performance. If the hired manager’s objectives are different than those of the owners, for example, if the manager’s goals are to have an easy job, to not bother to evaluate employees, to benefit other entities, including him or herself, with the firm’s funds, then that creates a principal-agent problem. This is also referred to as conflict of interests, because the owners and the manager have differing interests or goals.
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Institution
Decision Making Economics
Course
Decision Making Economics
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- Institution
- Decision Making Economics
- Course
- Decision Making Economics
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- Uploaded on
- April 26, 2022
- Number of pages
- 4
- Written in
- 2013/2014
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- Exam (elaborations)
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- Questions & answers
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