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Economics is a wide subject with a lot of intricate topics, and one such topic is the principal agent problem in public. There are so many aspects of this topic that you may get confused. So if you are noticing that this is a tricky topic to comprehend on your own, then you must grab the principal–agent problem in public homework help.
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Understanding the Principal–Agent Problem in Public
An agent is the one that is appointed by the principal to take decisions on his behalf. Here the agents, as well as principals, can be either individuals or the entire business entity or any other organization. The principal agent problem arises when the agent starts thinking of own best interests which are contradictory to the interests of principal.
So you can also say that the principal agent problem will arise when both the parties are having conflicting interests. Once you will receive the principal–agent problem in public homework help then all these things will become clear.
The example of the principal–agent problem in public
When we consider the principal agent problem not from a corporate point of view but from a public point of view, then the best example is the government and its citizens. In a democratic country, people have a right to elect their government. So the citizens are the principals in this case, and the chosen government is acting like the agent of citizens and is working on their behalf.
The role of the government (agent) here is to see the interests of all its citizens (principals) and work for their betterment. But sometimes it may be seen that the government itself is engaged in contradictory practices that are harmful to the citizens. There are cases of unnecessary regulations, corruption, manipulative deals, excessive expenditure on unnecessary fronts and a lot of other things that are not for the benefit of economy as a whole.
Another example of principal agent problem in public is that a particular government department may have given the right to its officials to work on its behalf. But those government officials or the people in power may work for their own interests rather than following the exact guidelines given by their department.
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