According to agency theory, how would you describe basic human nature? How does this basic human nature contribute to problems within organizations? What is the agency problem? Solution According with Agency Theory, humans beens are self motivates by their own interest, they are economically rationals because they always are seeking their own profit. So, they are going to do things since they obtain personal gain for that. As persons are seeking personal gain, there is a interest conflict with organization goals if these are not equal to their own targets. The Agency problem propose that exists a Principal or shareholder that requires an agent to manage his business but it is very hard that agent\'s desitions be made in his shareholder best interest because Agent has his own agenda..

1. According to agency theory, how would you describe basic human nature? How does this basic
human nature contribute to problems within organizations? What is the agency problem?
Solution
According with Agency Theory, humans beens are self motivates by their own interest, they are
economically rationals because they always are seeking their own profit. So, they are going to do
things since they obtain personal gain for that.
As persons are seeking personal gain, there is a interest conflict with organization goals if these
are not equal to their own targets.
The Agency problem propose that exists a Principal or shareholder that requires an agent to
manage his business but it is very hard that agent's desitions be made in his shareholder best
interest because Agent has his own agenda.