The Principle Agent Relationship between Management and Employees

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This 8 page paper examines the principle-agent relationship that takes place between the management and staff of a company. The paper explains what the relationship is and how it manifests, looks at what is meant by agency costs and considers how elements such as moral hazard, adverse selection, asymmetry of information and signalling are seen I the way the relationship ship is run. The paper ends by considering how the employer should management the relationship.