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Agent-zákazník problém v distribuci finančních produktů
[Agent-Principal Problem in Financial Distribution]

Author

Listed:
  • Jiří Šindelář
  • Petr Budinský

Abstract

The paper deals with the agent-principal problem (adverse selection) in the distribution of investment products. Utilising data from the Czech financial market, a linear model with mixed effects was constructed, evaluating the relationship between remuneration of individual agents and quality-costs of the products they recommend. The results were structured for different organisational setups. We have found that in some less important environments from the market perspective (small and medium multi-level marketing networks, small and big pools, medium and big flat firms), there is a negative association between quality-cost of the contracted product and the amount of commission paid out to the agent. This indicates potential consumer detriment. In the majority of organisations dominating the industry, however, the direction of this relationship is positive in nature or statistically insignificant. Hence, the systemic potential for instigating the adverse selection was not detected in a major part of the market, bringing up regulátory implications in the conflict of interest and inducements area.

Suggested Citation

  • Jiří Šindelář & Petr Budinský, 2018. "Agent-zákazník problém v distribuci finančních produktů
    [Agent-Principal Problem in Financial Distribution]
    ," Politická ekonomie, University of Economics, Prague, vol. 2018(4), pages 491-507.
  • Handle: RePEc:prg:jnlpol:v:2018:y:2018:i:4:id:1208:p:491-507
    as

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    References listed on IDEAS

    as
    1. William T. Ross, Jr. & Erin Anderson & Barton Weitz, 1997. "Performance in Principal-Agent Dyads: The Causes and Consequences of Perceived Asymmetry of Commitment to the Relationship," Management Science, INFORMS, vol. 43(5), pages 680-704, May.
    2. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    3. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
    4. Danilov, Anastasia & Biemann, Torsten & Kring, Thorn & Sliwka, Dirk, 2013. "The dark side of team incentives: Experimental evidence on advice quality from financial service professionals," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 266-272.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    adverse selection; investment funds; agent-principal problem; financial intermediation and advice; unit-linked life insurance;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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