Introduction

Economist Kenneth Arrow (1991: 48) makes clear in an overview of principal-agent theory that the costs of overcoming the asymmetry of information between the ignorant principal and the expert agent can be very high. Moreover, even if such costs could be overcome, the opportunity for principals to use specific monetary incentives is very limited (Braun 1993). These difficulties create pressure for simple contracts that do not necessarily incorporate monitoring, incentives, or other features required for an efficiently structured relationship. This chapter is about the simple contractual solution to the problem of delegation in science policy, from its institutionalization just after World War II to its termination in the 1980s.