The Principal Agent Problem in Whaling

Eric Hilt: Whaling vessels were typically owned by a small handful of investors. He says that created powerful incentives for the agent to make really good decisions and do his job well. But as the whaling industry grew, more investors wanted in; ownership became less concentrated. Some states even granted corporate charters which shifted management from small investor groups to corporate boards and executive officers,. This also introduced what's called the principal agent problem.