Systems | Skin in the Game 1 of 4 | Nassim Taleb
The Gospel of Crazy Eye Dog
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The Agency Problem
Mr. Joy Long: Insurance companies study the idea of agency as studied by insurance companies. Simply you know a lot more about your health than any insurer would, he says. You have an incentive to get an insurance policy when you detect an illness before someone knows about it,. He says that's where the principal agent problem manifests itself in the misalignment of interest in transactions.
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