The Principal-Agent Problem in Succession

From Succession (HBO)

Categories:

Run time: 2:19

Clip Description: An owner tries to get subordinates to act in the owner’s interest, and discovers the ordinary problem of not being able to see what they are actually doing.

Comparative Politics Concepts Discussed/Connected To: This clip is useful for principal-agent theory, which is one of the most portable tools in comparative politics: it structures the relationship between voters and legislators, legislators and bureaucrats, party leaders and backbenchers, and international organizations and member states. The same three ingredients recur – divergent interests, asymmetric information, and costly monitoring.

Possible Uses in Classroom: Use this to introduce delegation before applying it to a political case. Students grasp the logic faster in a corporate setting where the interests are frankly stated, and the transfer to bureaucratic oversight or coalition government is then straightforward.

Discussion Questions

Name the principal, the agent, and the specific thing the principal cannot observe. Then do the same for a voter and a legislator, and for a legislator and a bureaucrat. The three ingredients — divergent interests, asymmetric information and costly monitoring — are present in all three relationships, but not in equal proportions. Say which ingredient is hardest to fix in each case, and why the political versions are harder than the corporate one.
Monitoring costs real money and real attention, which is the reason principals delegate in the first place. State the benefit that outweighs the loss of control — expertise, capacity, credible commitment, plausible deniability — and then name a case where the delegation clearly went wrong. The interesting cases are the ones where the principal understood the risk and delegated anyway; say what made it worth it.
A parliamentary executive commands a standing legislative majority; a presidential one does not. That looks like a reason to expect tighter control in parliamentary systems, but it also means the body doing the monitoring is composed of the executive’s own partisans, who have little incentive to embarrass it. Which arrangement has the worse principal-agent problem between legislature and executive — and does your answer change if you care about policy drift rather than corruption?

Assignment

Pick one bureaucratic agency in any country and reconstruct, from public documents, how its legislature actually watches it. Most of what you need is online: statutory reporting requirements in the enabling legislation, budget hearing transcripts, the reports of an inspector general or a national audit office, and the record of any judicial review. Roughly three pages, in three parts. First, inventory the mechanisms. Second, classify each as police-patrol or fire-alarm oversight in McCubbins and Schwartz’s sense — the former is the legislature going out to look, the latter is the legislature waiting for somebody else to complain and then reacting. Third, assess which the legislature genuinely relies on, using evidence of what it has done rather than what the statute says it may do. The finding that usually surprises students is how heavily even well-resourced legislatures depend on fire alarms, and how much that hands agenda control to whoever is positioned to pull one — the press, an interest group, a whistleblower, a rival agency. Close by saying who pulls the alarms in your case, and whether that distribution advantages anybody in particular.

Clip hosted on Critical Commons.