The article discusses the classroom lecture that improves the traditional instruction in decision analysis by relating decision making under risk to the principal-agent problem. The baseline decision scenario is examined both from the perspective of a firm desiring to maximize the expected profit and from the perspective of a risk-averse manager desiring to maximize the expected utility. The article also provides students' assessments regarding the effectiveness of the lecture.
Decision Analysis and the Principal-Agent ProblemDecision Sciences: Journal of Innovative Education
DepartmentEconomics, Finance, & Quantitative Analysis
Digital Object Identifier (DOI)10.1111/j.1540-4609.2008.00201.x
Citation InformationKatzman, Brett E., Penny Verhoeven, and Hope M. Baker. "Decision Analysis and the Principal–Agent Problem." Decision Sciences Journal of Innovative Education 7.1 (2009): 51-57.