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The Principal-Agent Problem - Mind Map
Mind Maps have been produced to introduce topics and give students an overview of key topics being studied. The maps can be viewed as a whole page or, for those who prefer a more linear approach, as a text version.
View larger version of the mind map.
- Competition
- Perfect
- Homogeneity of goods
- Perfect information
- Large number of buyers and sellers
- No control over market price
- Imperfect
- Differentiation of goods
- Imperfect information
- Monopoly power
- Market Failure
- Specialisation and Exchange
- Akerlof
- Lemons
- Market Breakdown
- Low quality goods
- Asymmetric Information
- Principal
- Agent
- Moral Hazard
- Adverse Selection
- Solutions:
- Signals
- Advertising
- Branding
- Specialising in providing information
- Regulation
- Provision of incentives to encourage appropriate and desirable behaviour
- Screening
- Employing a third party
- Background checks
- Game Theory
- Risk
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