The Principal-Agent-Theory within the Context of Economic Sciences

The core subject in the principal-agent theory is the relationship between orderer - the principal - and contractor - the agent. Both the parties are individuals that act out of their self-interest. As one among the first researchers, Ronald H. Coase attempted to outline in his article "The Nature of the Firm"published in 1937 why economic activities take place to a significant extent through different institutions instead of exclusively through the markets. This is because the previous approach under the neoclassical theory with its causal principles resulted in institutions, although recognized, being at the same time classified as without effect to allocation of resources. Coase's contribution was the key trigger of the revolution within microeconomics and was to become a reference basis to New Institutional Economics.