Agency Th eory 35
to be in the same profession, and had a long history of court successes. And, too,
they had generally good career alternatives. In short, bureaucratic responses to
political control under conditions of divided government depend on at least these
factors.
Agency Th eory
Th is chapter closes with a review of the most popular contemporary theory of
political control of bureaucracy: principal-agent theory or, more simply, agency
theory. Th is new framework has been widely applied to studies in the infl uence of
principals, particularly Congress and the president, and agents, namely, the civil
service. At its base, principal-agent theory seeks to explain how the principal can
motivate the agent to behave in the principal’s interest, despite the fact that the
principal cannot completely control or even completely monitor the agent. As
used in the fi eld of public administration, the initial premise of this theory was
that bureaucracies are either out of control or at least very diffi cult to control. Th is
premise is taken primarily from the early economic analyses of bureaucracy by
Gordon Tullock (1965), Anthony Downs (1967), and William Niskanen (1971),
all of whom regarded the bureaucracy as if it were a maximizing or self-seeking
individual or fi rm in a market. In this premise, the bureaucracy hoards informa-
tion (information asymmetry), seeks autonomy, and shirks.
Using both empirical fi eld research primarily with quantifi able data and
deductive math modeling, agency theorists have tested the range and form of
legislative and executive control over bureaucracy. Almost all this research is
conducted on the national government. In their review of the fi ndings, Dan
Wood and Richard Waterman (1994) state that agency theory is explicit in its
assumption of the logic of the politics-administration dichotomy. Th e assump-
tion, of course, is that the relationship between elected leaders (principals) and
civil servants or bureaucrats (agents) is hierarchical and could be understood as
a series of contracts or transactions between a buyer of services and a provider
of services. In the public context, the elected “buyer” attempts to shape the ser-
vice to his or her preferences by laws, regulations, executive orders, appropri-
ations, hearings, and all manner of co-management. Th e bureaucratic “seller”
of services is a mixture of professional education and expertise, responds to
laws and constitutions, and attempts to serve its clients. Agency theory is an
especially useful way to understand the relationship among time, politics, and
bureaucracy. Legislators wishing to move bureaucracies toward their favored
positions are controlled by past coalitions and the legislation resulting from
those coalitions. According to Wood and Waterman, “Agency theory posits a
process of interaction between principals and agents that is dynamic, evolving
through time. Th roughout this process, bureaucracies have distinct informa-
tional and expertise advantages over politicians. Th ey understand the policy
and the organizational procedures required to implement it. As a result, they