This page of the essay has words. Download the full version above. This philosophy is still in existence even though various psychological studies have proven that human beings cannot be rational all the time. The rationale behind maximizing their own utility has extended to the corporate world where one party principal concedes authority to another party agent to act on his behalf.
Agents and Agency Relationship: Principles and Problems
Please join StudyMode to read the full document. Agency relationship occur when the principal hire the agent to perform a service on the principal behalf. In common, principal will delegate decision making authority to the agent. Agency Theory is concerned with resolving problems that may exist in agency relationship; that is, between principals such as shareholders and agent of the principals such as company executive. The two common problems that agency theory addresses are: 1 the problem that arise when the goals of the principal and the agent are in conflict.
Agency is the capacity of an actor to act in a given environment. It is independent of the moral dimension, which is called moral agency. In sociology , an agent is an individual engaging with the social structure.