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The definition of Agency problem Agency problem is the definition of a conflict which appears when a part is entrusted to look

after another parts interests, but so is not the case. Instead the entrusted part take advantage by using its authority or power to gain their own benefits. This is a problem that exists in almost every organization whether the organization is the church, a business or the government. Every organization is trying to solve this by instituting different measures. By introduce incentives for good behavior and punishments for bad behaviors. The organization can not eliminate this totally because the cost will at one point overweight the worth of the results.

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