Stupidity or Treason: An Analysis of Incompetence and Opportunism in a Dynamic Model of Expert Advice

The paper presented questions the authority of expert’s advice. In our days, clients extremely depend on expert’s advice as the areas of activities become more and more diverse and it becomes more complicated to manage personal welfare alone. Agents and their principals have different goals that they wish to attain, however, both parties are connected to each other and rely on each other’s conscientiousness. The trust can be betrayed when the individual surplus of one party of the agreement does not coincide with the best interests of another party. In this case the actions undertaken by the party that wishes to gain maximum surplus may contradict the agreed contract between the two parties. The topic of research discussed in this paper is whether some mechanisms can be installed in order to restrict the likeliness of opportunistic behavior rendered by the agent.