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"The Principal–Agent Approach and Public Administration" published on by Oxford University Press.

Principal agent problems arise frequently in situations of interdependence. Europe, with its various arrangements, is replete with principal agent problems that are mediated by institutions at various levels. While issues of water and land can provide a convenient focus, the essential problem is a deeper one. Decision making in principal agent situations has traditionally been considered in only a limited way. Current agency approaches seek to orient the interests of agents to those of the principal. More generalised formulations experience difficulties in reconciling interests. This is apparent not only in two-party forms but even more so in three-part(y) ones. In n-party environments things may appear to become simpler as n increases, but the problem may remain. An innovative exploration of a principal-agent situation which uses object-based concepts and simulations is presented in this paper. Different patterns of agent commitment are seen when it is applied to a European context. Suitable reconceptualisation of agency theory appears to have wide implications and applications. Its further development will allow more adequate specification of agency situations with immediate implications for policy and practice not only in Europe but in nations and regions around the world.

The rational choice perspective is prominent in many sociological, economic and political science literature but has been undervalued until now in the field of science studies. This special issue attempts to revalorise this perspective by introducing the principal-agent theory with relation to research policy-making. The introduction presents the basic features of the model of principal-agent and reviews the theoretical development and applications in research policy. It summarises the main findings of the articles in this issue and concludes that the studies in the framework of principal-agent demonstrate the willingness of combining theoretical rigour and 'requisite variety' by applying the theory to a large number of different fields linked to research policy-making.

This article evaluates the potential for the concept of 'artificial information asymmetry' to be used in political studies which focus on principal agent theory. We present real-world examples and excerpts from political writings to support our argument that, although artificial information asymmetry appears to be an important factor in principal agent relations, the concept has been underemployed in the political science agency literature. To be able to present more realistic scenarios of delegation, political scientists might be well advised to incorporate the concept so that it can be used in applied research.

The efficiency of hospitals is an important political issue and has been the subject of a number of studies. Most studies find evidence for inefficiency but provide no theoretical explanations for differences in efficiency. This study used principal agent theory to explain differences in efficiency between hospitals. Two agency issues are examined: (1) quality of care in the relationship between hospital and patient, and (2) internal organisation, i.e. the relationship between the hospital and its main departments. It was found that efficiency and quality go together. This implies that the potential harmful information asymmetry between hospitals and patients does not appear to be a major problem, because increasing efficiency does not seem to reduce quality. Further, we find no relationship between the efficiency of departments and the efficiency of the entire hospital. The interest of hospital departments is currently not in line with the interests of the entire hospital.

This paper introduces principal-agent theory and its recent application in science and technology studies. First, the text describes the theory itself and its developments in economics and political science. The paper examines the way these disciplines have used it to explain research related issues. Then, it presents specific applications of the theory to science and technology studies. The paper suggests that the Principal-Agent Theory is related to classical theories of the discipline, of which it is sometimes merely a formalization. It proposes, finally, that the theory weaknesses are due to its misuse and its limited development rather than to its real potential, judging by its successful application in other social sciences. ; Este trabajo presenta la Teoría de Principal-Agente y la forma en que se ha establecido en los últimos años en los estudios de ciencia y tecnología. Para ello describe, primero, la propia teoría y la forma en que la han desarrollado la economía y la ciencia política. El trabajo revisa el modo en que estas disciplinas la han utilizado para explicar problemas relacionados con ciencia y tecnología o que los tocan lateralmente. Después se ocupa de las aplicaciones concretas en los llamados estudios de ciencia y tecnología. El artículo propone que la teoría se relaciona con las teorías clásicas de la disciplina, de las que a veces es sólo una formalización. Como propone, por fin, que las debilidades de la teoría se deben antes a su mal uso y a su escaso desarrollo que a sus posibilidades reales, a juzgar por su éxito en otras ciencias sociales.

This paper extends and applies principal-agent theory to the performance of donor projects. There isvariation in the degree of divergence between the interests of the donor (the principal) and therecipient government (the agent). Further, the effort expended on observation of the agent is a controlvariable. We show that in a wide range of circumstances an implication of principal-agent theory isthat the principal should put greater effort into observation the wider is the divergence of interestwith the agent. We then test this prediction using data on World Bank project performance. We measure the degree of divergence between donor and recipient interests, as perceived by the donor, through a donor classification system of recipient governments. Consistent with the theory, we find that donor supervision of projects is significantly more effective in improving project performance where interests are widely divergent. However, donors do not put more effort into the supervision of projects in such cases. ; Cet article étend et applique la théorie Principal-Agent à la performance des projets d'aide. Les intérêts du donneur (le principal) et du gouvernement receveur (l'agent) peuvent différer de manière importante. Dans le modèle, l'effort mis en oeuvre pour observer l'agent est une variable de contrôle.Nous montrons qu'une implication du modèle principal-agent est que le principal devrait faired'autant plus d'effort pour observer l'agent quand ses intérêts divergent de ceux de l'agent. Nous testons ensuite ces prédictions en utilisant les données de performance des projets d'aide de laBanque mondiale. Nous mesurons le degré de divergence entre les intérêts du donneur et du receveur, telle que perçue par le donneur, par la classification des receveurs comme 'partenariatsdifficiles'. Comme prédit par le modèle, nous trouvons que la supervision des projets d'aide par le donneur permet d'autant plus d'assurer le succès des projets que les intérêts du donneur et dureceveur diffèrent. Toutefois, le donneur ne semble pas ...

This paper extends and applies principal-agent theory to the performance of donor projects. There isvariation in the degree of divergence between the interests of the donor (the principal) and therecipient government (the agent). Further, the effort expended on observation of the agent is a controlvariable. We show that in a wide range of circumstances an implication of principal-agent theory isthat the principal should put greater effort into observation the wider is the divergence of interestwith the agent. We then test this prediction using data on World Bank project performance. We measure the degree of divergence between donor and recipient interests, as perceived by the donor, through a donor classification system of recipient governments. Consistent with the theory, we find that donor supervision of projects is significantly more effective in improving project performance where interests are widely divergent. However, donors do not put more effort into the supervision of projects in such cases. ; Cet article étend et applique la théorie Principal-Agent à la performance des projets d'aide. Les intérêts du donneur (le principal) et du gouvernement receveur (l'agent) peuvent différer de manière importante. Dans le modèle, l'effort mis en oeuvre pour observer l'agent est une variable de contrôle.Nous montrons qu'une implication du modèle principal-agent est que le principal devrait faired'autant plus d'effort pour observer l'agent quand ses intérêts divergent de ceux de l'agent. Nous testons ensuite ces prédictions en utilisant les données de performance des projets d'aide de laBanque mondiale. Nous mesurons le degré de divergence entre les intérêts du donneur et du receveur, telle que perçue par le donneur, par la classification des receveurs comme 'partenariatsdifficiles'. Comme prédit par le modèle, nous trouvons que la supervision des projets d'aide par le donneur permet d'autant plus d'assurer le succès des projets que les intérêts du donneur et dureceveur diffèrent. Toutefois, le donneur ne semble pas ...

This paper aims at presenting a simple model of local decision-making based on the hypothesis of "constrained" monopoly power on the part of local governments. It adds the contribution of the principal-agent theory by assuming that: (a) monopolistic behavior is constrained by voters' efforts to monitor the outcomes of policies; (b) local governments' policies affect local property values. An empirical test of the model for the Portuguese local authorities indicates that the hypothesis of "monitoring" may be accepted and that of capitalization can only be accepted in relation to local public services not to local taxes on property.

With tools borrowed from the economic analysis of insurance, principal-agency theory has allowed political scientists new insights into the role of information asymmetry & incentives in political relationships. It has given us a way to think formally about power as the modification of incentives to induce actions in the interests of the principal. Principal-agency theory has evolved significantly as political scientists have sought to make it more applicable to peculiarly political institutions. In congressional oversight of the bureaucracy, increasing emphasis has been placed on negotiation of administrative procedures, rather than the imposition of outcome-based incentives, as originally conceived. Awareness of the problem of credible commitment has impelled more dramatic reformulations, in which agents perform their function only when their interests conflict with those of the principal, & they are guaranteed some degree of autonomy. 37 References. Adapted from the source document.

Election reform has become a major issue since the 2000 election, but little consideration has been given to the issues associated with managing them. In this article, we use principal–agent theory to examine the problems associated with Election Day polling place voting. We note that Election Day voting manifests problems that agency theory shows are difficult to overcome, including adverse selection of and shirking by poll workers. We then examine alternate methods of voting, such as early, absentee, and Internet voting, and show how these reforms can mitigate many of the more severe principal–agent problems in election management.

This paper provides a review of theories of hierarchies in organizations where the rationale for hierarchical organization derives from agents' limited capacities for acquiring and communicating information. In these circumstances, hierarchical organization of agents may serve to reduce the amount of time necessary for completion of production tasks, or to improve the quality of information for decision‐making on how to undertake production tasks. An informal discussion of theories of hierarchy is provided as well as a formal presentation of key models and results. Limitations of existing approaches are considered.