Principal-Agent Models: An Expansion

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 prin-cipals 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 instan-ces be found in which these assumptions do not hold? What hap-pens 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 conceptual-izing bureaucratic politics. Principal-agent models, derived from such disparate disciplines as law, finance, accounting, and economics, have become the basis for an extensive set of studies relating bureaucracy to elected officials (see Mitnick 1973, 1975, an