The Principal–Agent Framework and Independent Regulatory Agencies
| Author | Yannis Papadopoulos,Martino Maggetti |
| DOI | 10.1177/1478929916664359 |
| Published date | 01 August 2018 |
| Date | 01 August 2018 |
| Subject Matter | Articles |
https://doi.org/10.1177/1478929916664359
Political Studies Review
2018, Vol. 16(3) 172 –183
© The Author(s) 2016
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DOI: 10.1177/1478929916664359
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The Principal–Agent
Framework and Independent
Regulatory Agencies
Martino Maggetti and Yannis Papadopoulos
Abstract
The goal of this contribution is to discuss the application of the principal–agent framework to
the study of interactions between elected politicians – the principal – and independent regulatory
agencies – the agent. Through a review of recent research we suggest that the principal–agent
framework, despite its parsimony and analytical leverage, requires considerable refinement to
make sense of these relations. Indeed, evidence on the functioning of independent regulatory
agencies shows that some of their key practices tend to deviate from expectations based on
the principal–agent framework. First, principals do not necessarily seek to exert control over
agencies. Second, relations which structure the principal–agent mechanics other than those with
elected principals are decisive in shaping the behaviour of regulators. Third, agencies can acquire
political power over time and eventually subvert the logic of delegation. It is time to recognise
that these deviations should not be conceived as anomalies but rather as systemic features that
characterise post-delegation relations between elected politicians and independent regulators.
Keywords
credible commitments, delegation, independence, principal–agent, regulatory agencies
Accepted: 28 June 2016
The Principal–Agent Framework in Political Science
The principal–agent (PA) framework originated in economic theory and, more specifi-
cally, in theories of the firm, insurance and credit market economics to describe contract-
based interactions between a ‘principal’ – such as an employer – and an ‘agent’ who acts
on the principal’s behalf – such as an employee (Miller, 2005: 204–206). While the prin-
cipal exerts formal authority over the agent, the latter benefits from an informational
advantage about the real use of its abilities and about the correctness of its behaviour that
Institute of Political, Historical and International Studies, Faculty of Social and Political Sciences, University of
Lausanne, Lausanne, Switzerland
Corresponding author:
Martino Maggetti, Institute of Political, Historical and International Studies, Faculty of Social and Political
Sciences, University of Lausanne, Géopolis, Lausanne 1015, Switzerland.
Email: martino.maggetti@unil.ch
664359PSW0010.1177/1478929916664359Political Studies ReviewMaggetti and Papadopoulos
research-article2016
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