Explain how the agency problems have played a role in different parts of the economy moralhazard (u

Explain how the agency problems have played a role in different parts of the economy: moralhazard (unobserved effort), and adverse selection (unobserved type). Define clearly who arethe economic agents involved (managers, stockholders, borrowers, government, etc.). Foradditional points, use a simple model to illustrate the situations: remember that the mostimportant conditions are the incentive compatibility constraint and the participation con-straint. Be concise and clear in your explanation and focus on what the theory says. Avoidmaking unfounded statements.

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