Introduction to Social and Economic Sciences
Stephen J. Turnbull
筑波大学システム情報研究科准教授
Tuesday, December 22, 2009
Academic Year 2009 Third Term
Program Audits by the New Administration
- A severe problem in modern economies is the principal-agent
problem, also called the agency problem.
- It's also interesting theoretically.
- The agency relationship is between a principal and an agent.
- The principal has supplied funds and has the right to the profits.
- The agent actually manages the project.
- A typical example is the oversight of the government bureaucracy by
the executive leadership.
The Executive Branch
- In the presidential system, the executive is elected separately
from the legislature. E.g., America.
- In the parliamentary system, the legislature is elected, and
chooses the executive from its members. E.g., the U.K., Japan.
The Principal-Agent "Problem"
- Principals are typically powerful but busy.
- They don't have time to become experts.
- Even if they have expertise, there is insufficient time to study details.
- They delegate to better-informed agents.