Formally, Jensen and Meckling, (1976) define an agency relationship as "a contract under which one or more persons, (the principals(s), engage another person (the agent) to perform some service on their behalf which involves delegating some decision making authority to the agent.” The principal-agent problem arises in situations where one party (the principal) hires another party (the agent) to act on their behalf. The principal-agent problem may occur from divergent aims and interests between the principal and agent, causing conflicts and hindering the attainment of the principal's goals. With respect to capstone projects, the objectives of the principals and agents may be as follows. An academic instructor (principal to student) has the goal of giving the students a meaningful real-world” project learning experience. An industry sponsor (principal to student) may have the goal of giving the students an opportunity to solve a “real world” problem on behalf of the business or organization which will result in economic returns. Goals of student(s) may include earning a passing grade and/or gaining experience that will help them find a job. These are clearly divergent aims and interests between the parties and may be a significant challenge to the success of capstone projects.