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The problem of unilateralism in agency theory: towards a bilateral formulation

Pouryousefi, Sareh; Frooman, Jeff

Authors

Sareh Pouryousefi sareh.pouryousefi@nottingham.ac.uk

Jeff Frooman



Abstract

Some business ethicists view agency theory as a cautionary tale – a proof that it is impossible to carry out successful economic interactions in the absence of ethical behaviour. The cautionary-tale view presents a nuanced normative characterisation of agency, but its unilateral focus betrays a limited understanding of the structure of social interaction. This article moves beyond unilateralism by presenting a descriptive and normative argument for a bilateral cautionary-tale view. Specifically, we discuss hat swaps and role dualism in asymmetric-information principal-agent relationships and argue that the norm of reciprocity can function as a moral solution to agency risks in adverse-selection and moral-hazard problems. Our novel bilateral cautionary-tale formulation extends the normative boundaries of the asymmetric-information stream of agency theory, while leaving the fundamental economic assumptions of agency theory intact.

Citation

Pouryousefi, S., & Frooman, J. (in press). The problem of unilateralism in agency theory: towards a bilateral formulation. Business Ethics Quarterly, 27(2), https://doi.org/10.1017/beq.2016.77

Journal Article Type Article
Acceptance Date Aug 14, 2016
Online Publication Date Feb 28, 2017
Deposit Date Feb 9, 2017
Publicly Available Date Feb 28, 2017
Journal Business Ethics Quarterly
Print ISSN 1052-150X
Electronic ISSN 2153-3326
Publisher Philosophy Documentation Center
Peer Reviewed Peer Reviewed
Volume 27
Issue 2
DOI https://doi.org/10.1017/beq.2016.77
Keywords agency theory, cautionary-tale view, bilateral agency, asymmetric information, reciprocity
Public URL http://eprints.nottingham.ac.uk/id/eprint/40438
Publisher URL https://www.cambridge.org/core/journals/business-ethics-quarterly/article/problem-of-unilateralism-in-agency-theory-towards-a-bilateral-formulation/42E4187594F7E37BB4EA743458632DF1
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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