Finance School of management Incentive Problems Incentive Problems may arise when one party to a financial transaction has information that the other party does not, or when one party is an agent that makes decisions for another Incentive Problems limit the ability of a financial system to perform some of the functions uesTc22 Finance School of Management Incentive Problems ❖ Incentive Problems may arise when one party to a financial transaction has information that the other party does not, or when one party is an agent that makes decisions for another. ❖ Incentive Problems limit the ability of a financial system to perform some of the functions