Wednesday, August 11, 2010

The Principal/Agent Problem

The Principal/Agent problem is an issue in economics: how to get the person you are hiring to do what you want them to do, rather than what they would rather do. Two interesting examples from recent bush-hogging. Jay started bush-hogging the big pasture, when my priority was to redo the trails, which we then did. Then Randall went off into the backwoods finding new mini-fields to clear that I did not even know were there. And he sorted out problems with the bush-hog that I did not know existed. This guy knows more about what I want than I do. Do economists discuss this variant of the P/A 'problem'?