What Is the Principal-Agent Problem,and How Is It Relevant for Understanding

question 60

Essay

What is the principal-agent problem,and how is it relevant for understanding interactions between Congress and federal bureaucracies? Which institution or set of institutions usually acts as the principal,and which acts as the agent? What mechanisms and strategies are available to the principal to control the agent and minimize shirking?

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Definitions:

Prescription Pad

A pad of prescription forms used by a doctor to write orders for medication.

Managing Office Supplies

The process of ordering, stocking, and distributing supplies needed for day-to-day operations in an office.

Efficiency

The ability to accomplish a task or a job with the least waste of time and effort; optimizing output from given inputs.

Organization

A facility or set of coordinated facilities that provide health care.