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The principal-agent model of relationships refers to an arrangement whereby one party, acting as an agent for another, carries out certain functions on behalf of that other.

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The principal-agent model involves a principal delegating tasks or decision-making to an agent to act on their behalf. The challenge arises from the divergence of interests between the principal and agent, leading to potential conflicts, information asymmetry, or moral hazard. Incentive alignment mechanisms, such as contracts or monitoring, are typically used to mitigate these issues and align the agent's actions with the principal's objectives.

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Q: How would you describe the principal-agent model of relationships?
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