Principal-Agent Models Principal-agent models are very constructive in understanding employment relationships. In economics, the problem of motivating one party to act on behalf of another is known as the principal-agent problem (Principal-Agent Problem, 2007). Considerable research has been spent trying to understand the intrinsic moral risk associated with employment in principal-agent models i.e. the risk that employees will follow their own benefit at the expense of their employer. Gibbons (1998) states economists are not the only ones thinking about incentives, even incentives for effort (p.130) as is the common theme in much research to provide motivation to encourage the employees to act in the best interest of the employer. Prendergast (1999) states that available evidence suggests that incentives do matter, for better or worse (p.56). Work Ethic The best operational definition for work ethic that I have found to base this research on is an integrated and interactive system of attitudes, values, and beliefs that empowers an individual to adapt to......

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