Agency Theory

Stefan Linder, Nicolai Juul Foss

    Research output: Chapter in Book/Report/Conference proceedingEncyclopedia chapterResearchpeer-review

    Abstract

    Agency theory studies the problems and solutions linked to delegation of tasks from principals to agents in the context of conflicting interests between the parties. Beginning from clear assumptions about rationality, contracting, and informational conditions, the theory addresses problems of ex ante (‘hidden characteristics’) as well as ex post information asymmetry (‘hidden action’), and examines conditions under which various kinds of incentive instruments and monitoring arrangements can be deployed to minimize the welfare loss. Its clear predictions and broad applicability have allowed agency theory to enjoy considerable scientific impact on social science; however, it has also attracted considerable criticism.
    Original languageEnglish
    Title of host publicationInternational Encyclopedia of the Social & Behavioral Sciences
    EditorsJames D. Wright
    Volume1
    Place of PublicationAmsterdam
    PublisherElsevier
    Publication date2015
    Edition2.
    Pages344-350
    ISBN (Print)9780080970875
    DOIs
    Publication statusPublished - 2015

    Cite this

    Linder, S., & Foss, N. J. (2015). Agency Theory. In J. D. Wright (Ed.), International Encyclopedia of the Social & Behavioral Sciences (2. ed., Vol. 1, pp. 344-350). Amsterdam: Elsevier. https://doi.org/10.1016/B978-0-08-097086-8.73038-8
    Linder, Stefan ; Foss, Nicolai Juul. / Agency Theory. International Encyclopedia of the Social & Behavioral Sciences. editor / James D. Wright. Vol. 1 2. ed. Amsterdam : Elsevier, 2015. pp. 344-350
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    keywords = "Adverse selection, Agency costs, Compensation, Conflict of interest, Contracting, Corporate governance, Delegation, Hidden action, Hidden characteristics, Incentive intensity, Information asymmetry, Informativeness, Monitoring, Moral hazard, Motivation, Nexus of contracts, Pay for performance, Principal–agent relationship, Second-best solution",
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    Linder, S & Foss, NJ 2015, Agency Theory. in JD Wright (ed.), International Encyclopedia of the Social & Behavioral Sciences. 2. edn, vol. 1, Elsevier, Amsterdam, pp. 344-350. https://doi.org/10.1016/B978-0-08-097086-8.73038-8

    Agency Theory. / Linder, Stefan; Foss, Nicolai Juul.

    International Encyclopedia of the Social & Behavioral Sciences. ed. / James D. Wright. Vol. 1 2. ed. Amsterdam : Elsevier, 2015. p. 344-350.

    Research output: Chapter in Book/Report/Conference proceedingEncyclopedia chapterResearchpeer-review

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    KW - Moral hazard

    KW - Motivation

    KW - Nexus of contracts

    KW - Pay for performance

    KW - Principal–agent relationship

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    Linder S, Foss NJ. Agency Theory. In Wright JD, editor, International Encyclopedia of the Social & Behavioral Sciences. 2. ed. Vol. 1. Amsterdam: Elsevier. 2015. p. 344-350 https://doi.org/10.1016/B978-0-08-097086-8.73038-8