Agency Problems and Political Institutions

67 Pages Posted: 11 Oct 2013

Date Written: October 18, 1984

Abstract

To a very large extent, politics is agency. Indeed, agent-principal relationships pervade public and public-private behavior. This paper reviews the extensive but not yet integrated literature applying agency concepts to political settings. This includes agency in definitions of politics or political science; the state as agent and as consisting of agents; agents in the state, i.e., representatives and officials; agency in the relation between constituencies and government; bureaucrats as agents; agency in implementation and compliance; and agency in one functional area of government that has recently seen a great deal of scholarly attention, regulation. An "agency problems" approach to studying political and other agency institutions is proposed. A typology of core agency problems is presented that (unlike the majority of the economics literature) clearly defines the key dimensions of moral hazard and adverse selection. "Principal side" and "agent side" functional problems of agency are identified and discussed; the functional analysis produces another typology that may be employed to develop both theory and prescription in agency settings. Particular problems are displayed almost like games (e.g., the "Major General's problem"), reflecting their syndrome-like features. Three examples of the explicit application of the agency approach to political institutions are presented: diplomacy, policy and other advocacy, and the case of lawyer-legislators.

Keywords: agency theory, agent-principal relationships, agency problems, adverse selection, moral hazard, regulation, bureaucracy, diplomacy, representation, delegation

JEL Classification: D72, D73, D74, D78, D82, H11, K23, L51

Suggested Citation

Mitnick, Barry M., Agency Problems and Political Institutions (October 18, 1984). Available at SSRN: https://ssrn.com/abstract=2338579 or http://dx.doi.org/10.2139/ssrn.2338579

Barry M. Mitnick (Contact Author)

University of Pittsburgh ( email )

Katz Graduate School of Business
261 Mervis Hall
Pittsburgh, PA 15260
United States
412 648-1555 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
204
Abstract Views
1,006
rank
153,649
PlumX Metrics