Because of bounded rationality, incomplete foresight, and information asymmetries, it is impossible for principals to contract for every possible action or inaction of the agent so as to induce the agent to act in the principal's best interests.
Source quote, verbatim
it is impossible for principals to contract for every possible action or inaction of the agent in order to induce the agent to act in the best interests of the principal.
From
Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019), II. Agency Problems in Corporate Governance, p. 5 https://ssrn.com/abstract=3373393 · source PDF
Cite as
Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393
Holds when
where principals and agents face bounded rationality and incomplete foresight
restated_bykaal:claim:3808852-009 Because of human shortcomings, bounded rationality, incomplete foresight, and information asymmetries, it is i...
extendskaal:claim:2992962-030 Problems with smart contracts are inevitable because of subjectivity in human relationships, bounded rationali...
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