kaal:claim:3808852-009

Because of human shortcomings, 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 interest.

bounded rationality, incomplete foresight, and information asymmetries between principal and agent,7 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 interest of the principal.

Wulf A. Kaal, Decentralization and Feedback Effects (2021), III. Organizational Decentralization, p. 9
https://ssrn.com/abstract=3808852 · source PDF

Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852

• applies to principal agent relationships in limited liability entities

conditionsupport: evidencedrisk-and-incentivesdisclosure

• restates kaal:claim:3373393-008 Because of bounded rationality, incomplete foresight, and information asymmetries, it is impossible for princi...
• extends kaal:claim:2992962-030 Problems with smart contracts are inevitable because of subjectivity in human relationships, bounded rationali...

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