How the Principal-Agent Model can Benefit from Process-tracing: Systematizing the Analysis of Discretion and Autonomy

The PA model’s main contribution lies in its ability to offer tools to simplify complex realities to an extent that problems of discretion can more easily be understood and explained. However, in most PA theorization, the causal process in-between acts of delegation and discretion is not developed, and there is a large degree of obscurity about how the model’s elements are causally connected. Instead, most uses of PA theories focus instead merely on input and output. Yet just because there is a correlation between an act of delegation by principals and achieved outcomes that are close to what an agent wanted does not mean that delegation resulted in agency costs. It is here that process-tracing as a method is a useful methodological tool for improving our understandings of the causal processes underlying PA theories. The core of process-tracing as a case study method is the focus on tracing causal mechanisms, i.e. the causal process that links causes and outcomes together. We first identify the causal mechanisms and we expose the underlying causal logics of the theory to logical scrutiny, especially elements like preference heterogeneities and information asymmetries. Subsequently, we study the causal process whereby delegation results in agency empirically instead of treating it as an analytical black-box. This has the advantage that we can better control for problems of observational equivalence related to anticipatory adaptive behaviour of actors. We argue that the strategic deployment of process-tracing case studies nested in a broader comparative design will strengthen both the underlying theoretical logic of PA theories, and provide stronger evidence of how delegation can result in agency costs.status: publishe