Agency theory and bad architecture

The idea that a company employee (an “agent” in economic theory) might do something that does not benefit his employer (the “principal”) if the employee can operate without being held accountable (e.g. because the employee knows that his actions are “hidden”) is called “Agency Theory.” This is a well-known, respected and well-researched sociological theory on the performance of decision-makers in organizations.

If your CEO does not subscribe to this theory, ask them to please give back their bonus, because them getting a generous managerial performance bonus is grounded in this theory being correct.

Agency theory, in practice, is difficult to prove, as proving beyond any doubt that someone is behaving less than honestly is really hard. In legal terms, what matters is not the actual truth (that is subjective most of the time) but what you can successfully prove in court.

However, according...