The success of the workers' co-op model on pirate ships does not imply legitimate businesses should be organized that way; the correct solution to principal-agent problems differs case by case, and profit-oriented firms resolve them to the point where marginal cost equals marginal benefit using methods suited to their circumstances—Walmart's stock options being one such method to reduce free-riding.

normativepending

Speaker

Peter Leeson

Evidence Quote

the correct solution to the principal-agent problem is going to differ in particular instance by instance... profit oriented firms have strong interests in resolving these problems to the point at which the marginal cost of doing so equals the marginal benefit

Source

Peter Leeson on Pirates and the Invisible Hook 05/25/2009EconTalk
Created: 6/17/2026, 10:31:31 AM

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