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What Is the Principal-Agent Problem? Identify a Principal-Agent Relationship in Government

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Essay

What is the principal-agent problem? Identify a principal-agent relationship in government and discuss how an agent's actions may create difficulties or costs for the principal. Describe at least two ways that institutions can minimize the negative consequences of the principal-agent problem.


Definitions:

Confound

A variable other than the one intended to be manipulated by the experimenter that may be responsible for the effect on the dependent variable, making alternative explanations possible.

Clowns

Entertainers who perform comical acts, using makeup and exaggerated expressions to amuse an audience; traditionally associated with circuses, parties, and theatrical performances.

Operational Definition

A specific, concrete method of measuring or manipulating a conceptual variable.

Ethical Issue

A situation that requires a person or organization to choose between alternatives that must be evaluated as right (ethical) or wrong (unethical).

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