e-journal

The principal-agent problem in economics and in politics

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The purpose of this paper is to show that the assignment of right between the principal
and the agent, under which the latter have the management of the assets that the former own, is
similar to that between citizens and politicians in representative democracy, and it could, in both
cases, turn in to a state of being a voluntary hostage for the principal.
Design/methodology/approach – Those who take decisions either in the economy or in society/
politics, actually through their continuous presence and acting, set the frame under which decisions
will be made, i.e. which behaviour is acceptable, rules of the games, codes and terminology, values
and hierarchy among participants.
Findings – Since principals abstain from the everyday decision making either in economics or in
politics, they lose the ability to influence the frame and the practices on how decisions are made, and
therefore decisions are evaluated with the criteria established by agents and they are not those which
principals would possibly have.
Practical implications – A part of the management of the assets of principals in the economy or
the ‘‘asset of vote’’ of citizens, especially in the long run, actually is conducted by the agents
(managers-politicians) to favour their own pursuits and not those of principals.
Originality/value – Under these circumstances the principal-agent problem, either in economics or
in politics, has two alternative solutions: either principal should take over the management of his
assets, or accept the state of being voluntary a hostage of his servants-agents (managers-politicians).

Keywords Democracy, Assets management, Decision making, Economics, Politics

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Informasi Detail

Judul Seri

Humanomics

No. Panggil

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Penerbit

: Emerald Group., 2010

Deskripsi Fisik

Humanomics Vol. 26 No. 4, 2010

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

EKONOMI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

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