3. TECHNICAL-ADMINISTRATIVE AND AGENCY PROBLEMS IN ORGANIZATIONS
3.1 Method and approach
In this chapter we analyze the behavior of individuals in organizations. We attempt to separate two types of problems confronted by organizations in pursuing their goals: (1) technical-administrative problems that would occur even if all their members were dedicated to the fulfilment of the goals set by their controllers, and (2) agency-managerial problems that are rooted in the divergence among the preferences and goals of at least some members of the organization, including differences between its controllers and its agents1.
We will frequently comment on the relative efficiency of different types of organization’s behaving in a free-market environment. ...
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