Principal-Agency Issues and the Engineer-Manager

In Principal-Agency Issues and the Engineer-Manager, you'll learn ...

• Identify where the Principal-Agent problem exists
• Identify where and when moral hazards exist
• Define Utility Theory and marginal utility of individuals, corporations and governmental bodies
• Using marginal utilities as it applies to decision-making

Overview

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Credit: 2 CPD

Length: 34 pages

Agency theory applies to all aspects of the licensed professional engineer in describing that person’s motivation, their interaction with other engineers and other disciplines, and in dealing with external non-engineer decision makers such as political office-holders. The course applies centuries-old theories developed in economics and finance and behavioral sciences, which are still relevant today.

Applications of Agency Theory cover individual, managerial and employee work performances, partnering issues, and contract negotiations. Economic topics such as Moral Hazard, Utility Theory, Game Theory and Agency Theory will be described independently then interwoven into how professional behavior and management techniques utilize contracts to achieve mutually beneficial goals. Rarely does an engineering education include these topics yet Agency Theory is considered one of the most critical concepts in both personal and professional lives.

Learning Objectives

Upon completion of this course, participants will be able to:

• Identify where the Principal-Agent problem exists.
• Recognize where and when moral hazards exist.
• Define Utility Theory and marginal utility of individuals, corporations and governmental bodies.
• Explain how marginal utility applies to decision-making.
• Describe how to develop first and second best Solutions.
• Classify the differences between price and value.
• Summarize asymmetric information and how to address contracts when asymmetric information is apparent.
• Interpret survival bias and why some industries don’t act in the best interests of their customers.
• Outline how monitoring costs affect contract structure including contract enforcement.
• Analyze the total costs of the Principal-Agent problem for individuals, corporations and society at large.

Certificate of Completion

You will be able to immediately print a certificate of completion after passing a multiple-choice quiz consisting of 25 questions. CPD credits are not awarded until the course is completed and quiz is passed.