Principal-agent Theory and Representative Government

In recent decades economists have devoted great efforts to the analysis of the principal-agent problem (see for example Milgrom and Roberts 1992 and the Wikipedia article on “Principal-agent Problem”). This area of study has to do with the incentives and disincentives of an agent acting on half of a principal that he is presumed or contracted to represent. No brief summary can do justice to the great variety of issues and problems considered in this literature, except possibly this: a perfect agent is, for various reasons, pretty much impossible; and in many cases a great gap exists between what the agent

Read more at The Independent Institute