what is a good way to overcome the principal agent problem 
a good way to overcome the principal agent problem is by aligning the interests of both the principal and the agent and removing any conflict of interest one of the best ways to do this is by aligning the compensation of the agent to a performance evaluation if the agent performs well they will see a direct financial benefit if they perform poorly the opposite will be true methods to achieve a link between performance and compensation are stock options deferred compensation plans and profit sharing the bottom linethe principal agent problem is a conflict that arises between an individual or group and the individual charged with representing them due to agency costs whereby the agent avoids responsibilities makes poor decisions or otherwise engages in actions that work against the benefit of the individual they represent to remedy the agent principal problem the principal must take action to create an environment or incentives that would motivate the agent to work in the best interest of the principal when engaging any representative on your behalf it s important to be aware of the principal agent problem to ensure you are getting the best service possible 