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The agency problem can be intensified when an agent acts on behalf of multiple principals (see multiple principal problem). [ 6 ] [ 7 ] When multiple principals have to agree on the agent's objectives, they face a collective action problem in governance, as individual principals may lobby the agent or otherwise act in their individual interests ...
The multiple principal problem, also known as the common agency problem, the multiple accountabilities problem, or the problem of serving two masters, is an extension of the principal-agent problem that explains problems that can occur when one person or entity acts on behalf of multiple other persons or entities. [1]
Business journalist Kimberly Amadeo reports: "The first signs of decline in residential real estate occurred in 2006. Three years later, commercial real estate started feeling the effects. [36] Denice A. Gierach, a real estate attorney and CPA, wrote: most of the commercial real estate loans were good loans destroyed by a really bad economy.
A standard example is the market for used cars with hidden flaws, also known as lemons. George Akerlof in his 1970 paper, " The Market for 'Lemons' ", highlights the effect adverse selection has on the used car market, creating an imbalance between the sellers and the buyers that may lead to a market collapse.
One example is a principal–agent approach (also called agency theory), where one party, called an agent, acts on behalf of another party, called the principal. However, a principal–agent problem can occur when there is a conflict of interest between the agent and principal. If the agent has more information about his or her actions or ...
One 2017 NBER study argued that real estate investors (i.e., those owning 2+ homes) were more to blame for the crisis than subprime borrowers: "The rise in mortgage defaults during the crisis was concentrated in the middle of the credit score distribution, and mostly attributable to real estate investors" and that "credit growth between 2001 ...
The relationship between a company's shareholder and the board of directors is generally considered to be a classic example of a principal–agent problem. The problem arises because there is a division between the ownership and control of the company, [10] as a result of the residual loss.
At one time, all real estate brokers and agents, or Realtors, practiced "single agency", meaning they represented only the seller. In the 1990s, the concept of buyer agency became popular, allowing a buyer to retain an agent who would represent the best interests of the buyer alone. The first national company to provide this service was The ...