What Is Principal Economics. A principalagent problem exists in the credit market due to the asymmetric information regarding the borrowers effort or the quality of the project. For example managers may be profit-satisfiers leading to higher costs and less profit.
To try and overcome the principal-agent problem the principal will have to spend money on monitoring and providing incentives for workers. For 14 years he taught EC10 Principles the most popular course at Harvard. Or the loan may be partially amortized during its term with.
Gregory Mankiw is Robert M.
Essays in Honour of John Vanderkamp ed. A Universidade de Vigo. Theory of the firm. London GB 01-Apr-2021.
