For example:

A king designs a bridge, and he unknowingly does a bad job. He asks an engineer for her opinion, but the engineer fears that if she tells the truth, the dictator will be angry with her.

More generally, I'm thinking of situations in which the principal requests feedback/information from the agent, but fear of retribution prevents the latter from being honest.

It seems like a reasonable example of the principal-agent problem, with conflicting incentives, but I wasn't sure if this situation had its own name.

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    $\begingroup$ It's a little nonstandard, but I think so. When I think "principal-agent" I'm thinking "a subordinate person does a bad job because incentives are not aligned with the person in control", and this seems to fit that category. $\endgroup$ Aug 13, 2021 at 14:55

1 Answer 1


I think it is. Intelligent economist site states:

The Principal Agent Problem occurs when one person (the agent) is allowed to make decisions on behalf of another person (the principal). In this situation, there are issues of moral hazard and conflicts of interest.

The agent usually has more information than the principal. This difference in knowledge is known as asymmetric information. The consequence is that the principal does not know how the agent will act. Also, the principal cannot always ensure that the agent acts in the principal’s best interests. This departure from the principal’s interest in the agent’s interest is called an “agency cost.”

  • In the example you mention the agent can make decision on behalf of principal (approve or reject design).

  • Agent has more information than principal.

  • Interest of agent and principal are not aligned. Principal wants honest answer, agent wants to keep her head. So there is conflict of interest.

If it has all features of principal agent problem I think it qualifies.


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