FIN 800 Study Guide - Game Theory, Stakeholder Theory, Consequentialism
Document Summary
Principal-agent theory is about how individuals manage situations involving goal incongruity between two or more persons. Important to get clear on sort of theoretical commitments that are essential to agency theory, in order to distinguish between agency theory itself and certain incorrect interpretations that have become widely promulgated. Important to be more specific about circumstances in which moral obligations can arise out of agency relations. Assume that conflicts of interest that give rise to agency-risks may result from a variety of motivations, on the part of agents and principals. Two outstanding problems: the first of two outstanding problems stems directly from the tendency among game theorists to black-box all questions of motivation. Two components of opportunism n the standard sense of the term: taking advantage of circumstances as they arise, acting without regard for principle. Opportunistic behaviour: direct consequence of agents acting in accordance with the general game theoretic principle known as sequential rationality.
