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Light Principle Agent Theory

In light principle-agent theory, why might dentists and attorneys be required to subscribe to professional codes of ethics that prevent (or at least limit) their ability to sell unneeded services to their clients? Why do we not see similar codes of ethics for automobile mechanics?

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In the Principle-agent theory, it is presumed that the manager has information about the day-to-day operations of the firm and the firm's profitability that the owners lack. In addition, the manager has other goals in mind beyond the owner's welfare, such as on-the-job perks, an ...