The Beneficial Effects Of Principal-Agent Problem.

Kamil, Anton Abdulbasah The Beneficial Effects Of Principal-Agent Problem. Working Paper. Universiti Sains Malaysia.

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    Abstract

    This paper focus on a principal-agent problem in which the agent first learns an estimate of his production costs, then he has to decide whether to sink a fixed entry investment, and finally, if he has invested, the principal offers a price on a take-it-or-leave-it basis'. If the cost estimate is precise, we show that, in equilibrium, the agent will never invest, because then the investment itself signals low costs, which in turn will make the principal propose a lower price.

    Item Type: Monograph (Working Paper)
    Subjects: Q Science > QA Mathematics > QA1-939 Mathematics
    Divisions: Pusat Pengajian Pendidikan Jarak Jauh (School of Distance Education)
    Depositing User: ARKM Al Rashid Automasi
    Date Deposited: 29 Jul 2009 15:29
    Last Modified: 13 Jul 2013 12:42
    URI: http://eprints.usm.my/id/eprint/11470

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