Saturday, February 15, 2020

Principal agent theory Essay Example | Topics and Well Written Essays - 750 words

Principal agent theory - Essay Example The relationship that takes place between particular agents along with a particular principal is recognized as agency. Under the principal agent theory, the principals liability does not ends when authority is transferred to the agent and the principal continues to be liable to the third party for any shortcoming from the end of the agent. The agent principal theory is applied in various contexts such as employment and real estate. In case of employment a principal agent relationship arises when a owner of c particular company hires a manager to work or operate on his behalf while dealing with third parties. In this case the principal is the owner of the company and the agent is the manager. Similarly, subordinates become agents and managers become agents when subordinates work on the behalf of the managers. In both cases the principal is held reliable for any wrong doings conducted by the agent. Issues in Principal Agent Theory Owners of a company are regarded as principals when the y enter into a contract with the agents as agents accept that they will manage the principal’s business. ... An issue between the agent and the principal does not take place until there is a coexistence of the benefits for both the principal and the agent. A principal might end up experience cost of agency when the self interest of both the individuals deviates. This is because if the agents have the opportunity they will try to ensure that their own utility is maximized as they end up giving more importance to their self interest over the interest of the principal (Steiner, 2002, p.17). There is ample amount of probability that both the agents and the principals do not share mutual opportunities of benefits. The theory of agency even states that a principal cannot be sure whether agent will give importance to his own utility over the utility of the principal thus the principle tries to minimize losses that are projected towards his own utility. They do so by keeping strict control over the agent and monitoring the behavior of the agent. The issue that is caused due to the self serving beha vior of the agent is even recognized as hidden action (Stolle, 2008, p.63). An issue of hidden action arises as the agent may be involved in committing an act that cannot be observed by the principal or the principal does not have the information to identify what the agent is involved into. For example: In the case of real estate, an individual may hire a real estate agent to look for a home with certain characteristics and of certain price. The principal doers not know where to look for a home that is compatible with his requirements and is even not aware of the price of such a house. The agent’s task is to locate such a house and quote the correct price of the house to the principal. Since the agent has the motivation of maximizing his/her utility he may

Sunday, February 2, 2020

20th century differed from the world at the end of the 19th century Term Paper

20th century differed from the world at the end of the 19th century - Term Paper Example Asians and African have tried to function in the power structure; however, this structure of power has been engineered to uphold Western rule over economic, social, and geo-political articles (White, pg 98). At the beginning of the 20th century, racial and gender, discrimination still prevailed in the society. Even though the 19th century had seen the end of the Atlantic slave trade, the struggle for equality of Africans in the white population of Europe, South America, and North America sustained. All through the century, the societal taboo regarding gender discrimination decreased. The end of the 20th century witnessed that in almost all regions of the globe, women’s rights equaled that of men. Moreover, not only did people of other cultures get equal rights by the society, but most people criticized racial discrimination as well (White, pg 98). The term Specialism was created during the 1970s, as society began to wonder at, and question humanity’s natural prejudice regarding other species. The closing years of the 19th century, and the whole of the 20th century saw considerable amount of industrial development. Americans abandoned many farms and small towns in favor of industries and factories. These industries and factories, created for mass yield and exemplified on precipitous hierarchy, depended on manual labor, and small salaries. Labor unions slowly gained power in these surroundings. In time, they attained considerable advancements in working circumstances. They also succeeded in modifying American politics: most of the time siding with the Democratic Party, labor unions made up a crucial part of most of the social legislation endorsed from the 1930s, from the time of President Franklin D. Roosevelt’s New Deal, until the Kennedy and Johnson governments in the 1960s. Structured labor is still a significant economic and political power today;