In 2013, President Barack Obama nominated Chuck Hagel as secretary of defense to lead the Defense Department. There was substantial controversy in the Senate regarding some of Hagel's policy positions, and a number of senators attempted to block Hagel's confirmation as secretary, although he was eventually approved by a vote of 58-41. This attempt to block Hagel's confirmation is an example of which type of control to address the principal-agent problem?

Question

Quizplus · Accepted Answer

Attempting to block Hagel's confirmation before he was officially appointed is an example of a before-the-fact control mechanism. This type of control attempts to prevent the principal (in this case, the president) from taking an action that the agent (in this case, the secretary of defense) may not carry out in the best interests of the principal. By attempting to block Hagel's confirmation, Senators were trying to prevent the appointment of an agent who they believed may not carry out the president's interests.

In 2013, President Barack Obama Nominated Chuck Hagel as Secretary