What potential problems exist in agency relationships/ Managerial Economics
1. What is a firm?
2. Give examples of incentive conflicts:
a. Between shareholders and managers
b. Between coworkers on teams
3. What is asymmetric information? How can it limit contracts from solving incentive con- flicts?
4. Name the two parties involved in an agency relationship.
5. What potential problems exist in agency relationships?
6. Is it worthwhile for shareholders to seek to completely eliminate incentive problems with managers and directors through means such as monitoring? Why or why not?
7. What is adverse selection? Give an example.
8. How do reputational concerns aid in the enforcement of contracts?
