Conclusion

This chapter explains how the modified logic of delegation differs from the standard account in the treatment of the main parties to the relationship. The principal is a more untrustworthy and at times unresponsive figure in her relationship with the agents. The agent, likely a professional agent, is more complicated than portrayed. Professional responsibility is a mechanism to overcome the trust gap in a delegation relationship, according to principal-agent theorists. But overlooked are the side effects of professionalism, where the loyalties it fosters create tenacious control problems. It has a pronounced form in the church and the army, but other security and police forces may find punishing and controlling rogue agents a complicated process. While the boundaries to delegation are uncertain and some may choose not to delegate as much as they should, blame is one task that will be delegated.

Expertise

Professionals are in good standing in the principal-agent literature. With a sense of professional responsibility, an honor code or an oath, they bring extra effort to challenging and difficult to monitor tasks. Often they repay our trust. But there are also substantial challenges in delegating to those with difficult to replace knowledge and specialized training. These challenges are discussed in this chapter in a variety of individual and organizational contexts and in particular in analyzing the use that religious institutions and governments make of those with specialized training. Notwithstanding their rigidly hierarchical organizational structures, complete with rules of conduct and quite fearsome methods of control, the Catholic Church and the military have difficulty keeping agents on task. The chapter shows how these agents exploit their positions. Observing the theoretically unexpected passivity of principals when confronted with non-compliant behavior in these organizations, this chapter modifies the accepted account with the argument that group loyalties, asset specificity, and what the author refers to as the “agent confidence factor” put up the cost of punishment for the principal and protect noncompliant agents from the normal consequences of their actions.

Time and Effort

The most familiar incentive to delegate is to save time and effort. For parents, it might involve finding others to look after the baby. For shareholders, it involves finding managers to take proper care of their investments. For the thirty-two owners of teams in the National Football league it involves appointing a commissioner to negotiate deals with the media or players on the owners’ behalf. For citizens, it involves electing representatives to run the government. For governments it may involve outsourcing security tasks to militias. There is evidence that delegating some activities makes us happier, but as the chapter describes, it is challenging to keep agents on task.

Commitment

Sometimes principals delegate in order to control themselves rather than others. The incentive is to deliver on a commitment to themselves or to a valued audience. A football player finds an agent to look after his money for the protracted period when no longer playing. Or governments delegate to central bankers in order to commit to a sound economic policy for the long term, protecting against the temptation of spending for short-term electoral gains. More surprising at the international level, governments commit to human rights treaties and agencies, ostensibly giving up repression when dealing with opponents, dissenters, and critical journalists. While third-party or “fire-alarm” monitoring of these commitments by civil society organizations provides some added robustness to this delegation device, as the real-world application to human rights makes clear, fire alarms can be tampered with in a way unanticipated in principal-agent models.

Agreement

Principals delegate in order to resolve disagreements. We would be unwilling to invest energy in any sort of enterprise or activity, without a method to resolve the disputes that may arise. We grant someone the authority to interpret rules. Whether disciplining players in the NFL, deciding which country will host the soccer World Cup or settling disputes between governments in the World Trade Organization, principals turn to a dispute-resolving agent to sort it out. This chapter discusses the use of delegation to solve disagreements. Some scholars depart from principal-agent theory to use the term trustee to describe the autonomy in this type of delegation relationship, but this is an unnecessary departure. The key to controlling this agent lies in the initial selection process.

Blame

In this chapter, evading blame is the incentive to delegate. Retrospectively or prospectively, one delegates to a “fall guy” lower down in the organization to protect oneself from the consequences of one’s actions. Blame is a task that the principal opportunistically allocates the agent when the unanticipated contingency of a whistle-blower appears on the scene and wrongdoing becomes visible. Volkswagen software engineers, hired to write code, were tasked with the blame when the scandal over diesel emissions erupted; Abu Ghraib personnel were blamed for the torture of detainees; and commanders recruited militias rather than regular forces to carry out controversial violence in the French-Indian War, the Irish Civil War, and elsewhere.

Why Delegate?

There is no escaping the delegation relationship, whether in our everyday lives or in the wider economic or political world. This chapter introduces the central concepts that help us understand delegation such as principal, agent, information asymmetry, moral hazard, adverse selection, can’t control and won’t control and the various incentives to delegate. The aims of the book are to develop a broader more descriptively useful logic of delegation that has wide applicability and to do so in an informal and accessible way using real world examples. The book is structured around the variety of economic and political incentives to delegate, stretching from saving time and effort to saving reputation and position and finding someone to blame for wrongdoing.