Abstract:
Economic theories are increasingly popular in political science, and in particular in research on the
relations between the legislative, the executive, and the judicial branches of government. Among these
theories, principal-agent (´PA´) and transaction cost economics (´TCE´) feature particularly high in
our research agenda. Yet, pushed by the view that “the content of ´science´ is primarily the methods
and rules” (King et al. 1994: 9), and working with limited resources, political scientists have tended to
neglect careful theorizing. PA and TCE are taken off-the-shelf without much prior scrutiny, and past
conceptual mistakes are perpetuated. This paper aims at introducing and explaining the real PA,
positive agency, TCE, and incomplete contracts theories for the purposes of political analysis. In a
companion paper, I show the serious mistakes perpetuated by political scientists, and I argue that,
faced with a choice between those four economic theories, we should place our bets on a revised
version of TCE.
