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Sunday, May 17, 2020

The Reoccurring Concept Of The Principal Agent Problem

Hannah Kilby Webb Honors Political Science 28 November 2015 Concepts Paper The reoccurring concept of the principal-agent problem can be defined as employees taking advantage of their employers, or in political terms, elected officials taking advantage of their constituents by hiding information and specialization. Specialization becomes problematic when the agent uses their specific knowledge, in which the principal is lacking, to manipulate the actions of the principal. This issue can be solved by hiring, monitoring, and firing the employees. This is done in politics by electing the official, monitoring their actions, and voting them out of office if the elected fails to do what they were elected to do. Politicians can specialize in certain areas to make themselves seem more desirable to their constituents, claiming to offer something no other politician offers, which in turn makes it easier to be voted into office. An example of the principal-agent problem is elections. Elections produce responsiveness. Responsiveness breeds trust in polit icians. In order to gain that trust, politicians must obey the wishes of their voters to the best of their abilities. The voters use this to their advantage by voting, monitoring, and, if necessary, voting politicians out of office. However, the problem of low voter turnout prevents the solutions to the principal-agent problem. If people do not vote, their wishes can not be expected to be granted. In the United States ofShow MoreRelatedInterfaces Evergreen Services Agreement Essay example2044 Words   |  9 PagesInterface’s Evergreen Services Agreement Northwood University Problem Statement: Dan Hendrix, president and CEO of Interface, Inc. is challenged with deciding the future of Interface’s Evergreen Services Agreement (ESA) business model. This decision will impact Ray Anderson’s vision to create an environmentally stable enterprise. 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