INTRODUCTION

Principal-agent theory has proven a powerful tool for analyzing delegation relationships in a wide variety of settings, yet it remains under-developed in the study of international relations. Conventional wisdom holds that state principals face special, and often insurmountable, difficulties in realizing their interests when they delegate to international organizations (IOs). In this chapter we examine delegation to multilateral development banks (MDBs) and ask whether they are faithful agents. We demonstrate that analytic shortcuts commonly employed in the study of IOs can lead researchers to misleading conclusions about the faithfulness of IO agents.

In order to accurately assess whether delegation to IOs routinely leads to inordinate agency losses, analysts must first identify the actual principal(s) who has authority to delegate. This requires careful attention to formal institutional rules, the structure of the principal, and the preferences of the principal(s). In this chapter we introduce the idea of complex principals – principals with more than one actor individually or collectively delegating to the same agent – and argue that these common conditions must be considered when assessing IO behavior. When we employ models that more accurately reflect the structure of the principal in a specific empirical setting, we find that delegation to IOs closely resembles delegation to domestic agents. Both domestic and international agents shirk under similar conditions, and principals employ familiar tactics in an attempt to rein in errant agents.