Principal-Agent Models: An Expansion?

TLDR

Principal‑agent models, foundational to studies of bureaucracy and elected officials, rest on assumptions of goal conflict and informational asymmetry, yet these core premises have rarely been empirically tested. The study seeks to examine the validity of the principal‑agent model’s assumptions, identify cases where they fail, and explore the consequences of altering them. The authors critique the traditional model and propose a broader theoretical framework for conceptualizing bureaucratic politics.

Abstract

Principal-agent models have been the basis for an extensive set of studies relating bureaucracy to elected officials. Yet despite the outpouring of research, there has been little attempt to test the basic assumptions of the principal-agent model. The model makes two assumptions: that goal conflict exists between principals and agents and that agents have more information than their principals, which results in an information asymmetry between them. But how valid are these assumptions? Can instances be found in which these assumptions do not hold? What happens when we vary these assumptions? In this article, we present both a critique of the traditional principal-agent model and a presentation of a broader theoretical framework for conceptualizing bureaucratic politics.