What are agency problems Give an example of an agency proble

What are agency problems? Give an example of an agency problem. How can agency problems be avoided or at least limited?

Solution

An agency problem is when in a relationship the people (referred as agents) are entrusted to look after the interests of others (referred as principals) and instead they look for their own benefits.

To solve or avoid this type of problem organizations usually performs screening process and rewards people for their good behavior, organizations need to monitor all working activities within the organization premises to make sure its employees are working as they are supposed to