Project Management

Generalized Agency Problems

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Executive Summary

Agency problems in economics virtually always entail self-interested agency exhibiting "Insufficient" loyalty to principal. Social psychology also has a literature, mainly derived from work by Stanley Milgram, on issues of agency, but this emphasizes excessive loyalty - people undergoing a so-called "Agentic shift" and forsaking rationality for loyalty to a legitimate principal, as when "Loyal" soldiers obey orders to commit atrocities. This paper posit that individuals experience a deep inner satisfaction from acts of loyalty - essentially a "Utility of loyalty" - and that this both buttresses institutions organized as hierarchies and explains much human misery.

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