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"Tipping turns out to be an ingenious mechanism for solving principal-agent problems in a number of service-oriented industries." ~ Anthony Gill

The goal of this contribution is to discuss the application of the principal–agent framework to the study of interactions between elected politicians – the principal – and independent regulatory agencies – the agent. Through a review of recent research we suggest that the principal–agent framework, despite its parsimony and analytical leverage, requires considerable refinement to make sense of these relations. Indeed, evidence on the functioning of independent regulatory agencies shows that some of their key practices tend to deviate from expectations based on the principal–agent framework. First, principals do not necessarily seek to exert control over agencies. Second, relations which structure the principal–agent mechanics other than those with elected principals are decisive in shaping the behaviour of regulators. Third, agencies can acquire political power over time and eventually subvert the logic of delegation. It is time to recognise that these deviations should not be conceived as anomalies but rather as systemic features that characterise post-delegation relations between elected politicians and independent regulators.

Die Ausführungen behandeln die institutionelle Ausgestaltung der Alterssicherung in Deutschland. Im Mittelpunkt steht das Verhältnis zwischen Bevölkerung und Politik. Die Beziehung wird im Rahmen der Principal-Agent-Theorie - mit der Bevölkerung als Principal und der Politik als Agent - ausführlich beleuchtet. In einem ersten Schritt wird hierbei ein kurzer Überblick über die Principal-Agent-Theorie gegeben und das bestehende Verhältnis zwischen Bevölkerung und Politik in diesen theoretischen Ansatz eingeordnet. Anschließend wird die Beziehung modelltheoretisch bei Sicherheit / Unsicherheit bzw. symmetrischer Informationsverteilung / asymmetrischer Informationsverteilung analysiert. In diesem Zusammenhang zeigt sich, dass die bestehende 'Vertragsbeziehung' zwischen Bevölkerung und Politik im Bereich der Alterssicherung im Vergleich mit alternativen Ausgestaltungsmöglichkeiten zu Wohlfahrtsverlusten führt. Abgeschlossen werden die Ausführungen mit wirtschaftspolitischen Implikationen und Ansätzen für konkrete wirtschaftspolitische Maßnahmen.

This book assesses the use and limitations of the principal-agent model in a context of increasingly complex political systems such as the European Union. Whilst a number of conceptual, theoretical and methodological challenges need to be addressed, the authors show that the principal-agent model can still provide deeper insights into a wide range of political phenomena. Through an empirical analysis of multiple principal-agent relations in the EU, covering a variety of policy fields and political actors, the volume refines our theoretical understanding of the politics of delegation and discretion in the EU. It will appeal to scholars in interested in EU politics and policy, public administration and governance, and international organisations. The chapter 'Multiple principals preferences, different types of oversight mechanisms, and agent's discretion in trade negotiations' is published open access under a CC BY 4.0 license via link.springer.com

This book assesses the use and limitations of the principal-agent model in a context of increasingly complex political systems such as the European Union. Whilst a number of conceptual, theoretical and methodological challenges need to be addressed, the authors show that the principal-agent model can still provide deeper insights into a wide range of political phenomena. Through an empirical analysis of multiple principal-agent relations in the EU, covering a variety of policy fields and political actors, the volume refines our theoretical understanding of the politics of delegation and discretion in the EU. It will appeal to scholars in interested in EU politics and policy, public administration and governance, and international organisations. The chapter 'Multiple principals preferences, different types of oversight mechanisms, and agent's discretion in trade negotiations' is published open access under a CC BY 4.0 license via link.springer.com.--

Many organizations operate by majority rule. Why? I consider elections as ways to aggregate information rather than ways to reconcile preferences. This is a principal‐agent problem with many principals.Only mechanisms that minimize the weighted sum of type 1 errors (neglecting a deserving agent) and type 2 errors (rewarding an undeserving agent) can escape manipulation. Majority rule uniquely minimizes the sum of errors. Thus majority rule is a very good way to aggregate information.

Professor Merrill ably demonstrates that Supreme Court decisions should be examined as the product of an inherently political institution. Observers who assert that Justices are best understood as prophets of the law are practicing an intellectual sleight of hand that allows them to ignore the non­ doctrinal factors that affect judicial behavior. Such an effort is understandable. The Court is a much more complicated subject if its rulings reflect nonlegal factors as well as legal ones. The desire, however, to ignore the true character of the Court produces accounts of its behavior that are inadequate, incorrect, or wholly without content. Legal scholars who want to explain court decisions must consider closely the analysis offered by Merrill as well as his methodology. Moreover, scholars who wish to prescribe legal rules without understanding Merrill's arguments risk folly for they fail to consider how rules are adopted and applied by courts.

In the March 1988 issue of thisReview, B. Dan Wood invoked a principal-agent perspective to establish the importance of democratic hierarchies in shaping the outputs of public bureaucracies. He tested the model with air pollution enforcements of the Environmental Protection Agency (EPA) between 1977 and 1985. His results suggested some limitations on bureaucracies' responsiveness to elected political institutions, consistent with a principal-agent perspective with emphasis on the agent. Brian J. Cook challenges features of the design and empirical testing of Wood's hierarchical model. He questions the accuracy of Wood's characterization of the extent of EPA autonomy and power. Cook argues that a proper model requires recognition of the multiple principal nature of the U.S. system, and he advocates consideration of the normative foundations of principal-agent theory. Wood responds to both the substantive and methodological issues raised and suggests an eclectic approach in future research.

This paper applies and extends principal-agent theory to analyze the performance of donor projects. As in many situations, there is variation in the degree of divergence between the interests of the donor (the principal) and the recipient government (the agent). Further, the effort expended on supervision of the agent is a control variable. We first present a principal-agent model that shows that conditional on optimal contracting, the marginal effect of more precise supervision on the likelihood of project success is higher the wider the divergence of interests. We then test this prediction using data on project performance. We are able to 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.