alt Hacker NewsTo me, nepotism is a classic principal-agent problem.
Imagine you own a business, but you hire me to manage it.
If I negotiate a great salary and use it to get my kids the best education, help them get a house, fund them through unpaid internships? Not nepotism.
If you, the owner, say you want your dumb kid paid six figures for a do-nothing job? Eh, it's your money.
But if I want my dumb kid paid six figures of your money? So I decide we need a senior executive social media manager to look after our twitter account, or something? Probably you're not going to like me ripping you off.
Yes, plus sometimes the "owner" is a group of people. Then it gets more difficult for them to coordinate against the agent.
If you take six figures out of my money, I have a strong incentive to find out. If you take six figures from a treasure chest that belongs to million people, most of them will decide it is not worth their time to investigate.