AGENCY PROBLEM

A conflict of interest which is common in any relationship where parties are expected to act in accordance to the others' best interest. The main problem lies within the agent, commonly motivated by self-interest, who's decision is supposedly directed towards the best interest of the principal. Most of the time the agent's and the principal's best interest do not connive with each other which will result to this kind of problem. The agency problem is sometimes referred as "principal-agent problem."