Self-interest through agency: An alternative rationale for the principal-agent relationship

Economic actors are usually assumed to enter into principal-agent relationships due to efficiency gains from comparative advantage. This research explores whether such relationships may also arise because they allow principals to obtain a selfish, inequitable outcome without behaving themselves in an explicitly selfish manner. An experiment is reported in which principals either decide repeatedly how much money to share with recipients or select an agent to make the decision on their behalf. As hypothesized, principals keep more and recipients receive less when the allocation decision is made through agents.