If you’re not versed in finance, and even if you are, you might be skeptical about the following claim: Many of life’s challenges boil down to the “principal-agent problem”—the relationship between prime movers and those who are supposed to be acting on their behalf. Think about it, though: many marriages fail because of fundamentally irreconcilable life goals. People quit jobs because they feel micromanaged by their bosses. Individuals struggle to separate their own goals from the pressures of society. And pretty much every action we take exists somewhere on the spectrum between self-determination and following orders.The Principal-Agent Problem: The problem of motivating one party (the agent) to act on behalf of another (the principal).How do investors (principals) who give their money to entrepreneurs and managers (agents) figure out whether they’re going to see a return?Agents may have their own agendas. Principals can’t watch agents that carefully. Agents may do things o...