Principal-Agent Game
Principal-Agent Game
| Type | Core Diagnostic Game |
|---|---|
| Category | Diagnostic |
| Description | The principal-agent problem is the conflict of interest that occurs when one party (the principal) delegates work to another (the agent) whose goals are not perfectly aligned with their own. |
| Status | Permanent Beta |
Module Contents
Sovereign Games Navigation
Principal-Agent Game
The Principal-Agent Game describes one of the most common and destructive patterns in human organizations and society.
It occurs when one party (the Principal) delegates authority or power to another party (the Agent) to act on their behalf — and the Agent’s incentives become misaligned with the Principal’s.
Core Problem
The Agent almost always has better information and different goals (power, status, money, job security, ideology). Over time, the Agent begins serving themselves at the expense of the Principal.
Common Examples
- Citizens (Principals) → Politicians & Bureaucrats (Agents)
- Shareholders (Principals) → CEOs & Executives (Agents)
- Donors (Principals) → Charity / NGO leaders (Agents)
- Parents / Students (Principals) → School administrators & teachers (Agents)
Key Dynamics
- Information asymmetry (Agents know more)
- Moral hazard (Agents take hidden risks)
- Goal displacement (the institution slowly serves the Agents instead of the mission)
- Diffusion of responsibility
Connection to Other Games
- Often enables the Slave Owner Game
- Frequently amplified by Moloch dynamics
- Best countered by Skin in the Game and Results & Consequences
Sovereign Response
- Maximize Skin in the Game for Agents
- Increase transparency and monitoring
- Make exit easy (competition, choice, federalism)
- Build parallel institutions when the original ones are captured
See the Game. Refuse the Game. Build Better.