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As you have formulated it, this is a textbook example of the principal-agent problem. Given your assumptions: For the company, these kinds of systemic failures
by Tuna-Fish 9y ago
As you have formulated it, this is a textbook example of the principal-agent problem. Given your assumptions:
For the company, these kinds of systemic failures are unquestionably bad.
For the specific employees making each decision, this might have been the utility-maximizing choice. All they need to do is to keep the wheels rolling (sorry) and profit coming in until they are out.
No amount of punishing the company can fix this. In order to fix the problem, prosecutors need to go after the individuals who made the calls.
- sologoub 9y agoCompletely agree, but as with the VW case, I’d argue that many in management who knew and allowed it will not be punished.
- vinay427 9y agoCertainly, but justice is rarely carried out perfectly accurately. Hopefully getting close enough will send a warning of the consequences of such a decision to others in the industry. As an aside: A good number of people in Europe will apparently prematurely die as a result of their actions, so if nothing else, it will be incredibly difficult for many of these guilty employees to justify their actions even to themselves.