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1 Introduction Old Indian texts exhibit an amazingly clever perspective on human agency. This has already been noted by Zimmer (1969 : 89) who observes, in the context of Indian fables, that Indian political thought was characterized by “cold-blooded cynical realism and sophistication”. Within economics, this is dealt with under the heading of principal-agent theory. Roughly speaking, principal-agent theory deals with the problems that arise from asymmetric information, with one person being better informed than another one. In recent times, economists have

Jahrb. f. Nationalök. u. Stat. (G. Fischer Verlag, Stuttgart 1995) Bd. (Vol.) 214/1 Principal-Agent-Theorie ohne Substitutionsaxiom*) Principal-Agent-Theory Without the Independence Axiom Von Hans Rau-Bredow*, München 1. Einführung Fast alle Modelle der formalen Principal-Agent-Theorie gehen von der Theorie des Erwartungsnutzens aus. Diese Erwartungsnutzentheorie wird jedoch in einer bis auf Allais (1953) zurückgehenden und in den letzten Jahren verstärkt geführten Diskussion kritisiert und durch alternative bzw. allgemeinere Entscheidungsregeln zu

’s [ 2 ] work based on the standard principal-agent theory. Shareholders have corporate cash flow right in proportion with the shares they hold, whereas managers obtain performance-based compensation. Managers’ target function differs from shareholders’, leading to the expropriation of shareholders’ interest. Both convergence of interest and enhancement of supervision are important measures to reduce agency cost [ 2 ] . The concept of private benefits of control [ 3 ] raises a new principal-agent problem to entrepreneurs and scholars. Porta et al. [ 4 ] claims that

Securing the Foundation for a Second American Century

Jahrbücher f. Nationalökonomie u. Statistik (Lucius & Lucius, Stuttgart 2007) Bd. (Vol.) 227/5+6 Die Ausgestaltung von Versorgungsverträgen: Eine vertragstheoretische Analyse A Contract Theory Approach to Health Care Contracting Von Axel Mühlbacher, Neubrandenburg JEL I11, I18, L14 Delivery of health care, integrated health care delivery systems; selektive contracting, risks, methods; transactioncost, contract theory, principal-agent theory, incomplete contracts. Summary Transaction costs are an obstacle to the efficient operation of selective contracting. Health

How the Public Influences Foreign Policy


From a political economy perspective, politicians often fail to implement structural reforms. In this contribution we investigate if the resistance to reform is based on the differences in the risk preferences of voters, politicians, and bureaucrats. Based on three surveys among the German electorate, 175 members of the Federal German Parliament and 106 officials from German ministries, this is not the case. Since both politicians and bureaucrats have a higher risk appetite than the voters, their risk preferences cannot be seen as an explanation for the resistance to structural reform. Hence, it must be caused by other reasons. These could be interventions by veto players, wars of attrition by powerful interest groups, or reform logjams initiated. However, as during times of populist campaigns, the election process can put forth candidates with very high risk appetites, the constitutions of democracies turn out to be rather effective if hazardous actions and measures by political rookies and gamblers are inhibited by checks and balances.

The article explores the roots and dynamics of political consensus on EU membership in Hun- gary. Employing a principal-agent theory of the political process, it emphasises the role of various forms of competition in the healthy functioning of a representative democracy. An informal dis- cussion of the Hungarian case is followed by a game theoretical model of party collusion under circumstances when a new political dimension offers an opportunity for political representatives to weaken electoral control. A key lesson of the empirical findings as well as the formal


The Stasi, the secret police in the GDR, was an integral part of the planned economy. Over time, Stasi officers took on tasks related to economic planning and adopted the mentality and behaviour typical of the field. This paper takes a closer look at their aims and the ensuing consequences as illustrated by the GDR chemical industry. It focuses on a contradictory phenomenon: the co-existence of growth and inefficiency. Although the secret police enjoyed growing responsibilities, resources and partners, they were surprisingly inept at achieving their own economic and security targets. This phenomenon can be explained in two ways: Historically, by identifying the Stasi as the profiteer of economic crisis, or in terms of organization theory, by revealing some typical bureaucratic characteristics of the secret service (MfS).

Anreiz # Verein für Socialpolitik und Blackwell Publishing Ltd. 2006 283 cheap, lead to interpersonal relationships, are not directly related to performance and have a signalling value. In addition, they support intrinsic motivation, may increase social welfare and are exempt from taxation. Awards present an important additional instrument to be considered in principal agent theory. In many contexts they are superior to monetary compensation. Bruno S. Frey und Susanne Neckermann 284 # Verein für Socialpolitik und Blackwell Publishing Ltd. 2006