Representative Jesse Jackson, Jr. has recently come under fire for alleged misuse of campaign funds. According to a report on mainjustice.com, Jackson used campaign funds to decorate his Washington, D.C. home. He also allegedly spent $40,000 on a rolex watch for a "female friend." Jackson (D-Illinois) has been charged with misuse of campaign funds in the wake of the scandal. As part of a plea deal, he will be forced to pay back the spent money and resign his post, although the resignation is for unrelated health reasons.
Rep. Jackson's misuse of campaign funds is a classic example of the Principal-Agent dilemma. In this situation an agent is selected to represent and carry out the interests of a principal. The problem arises when the agent does not fulfill the responsibilities to the principal. The agent may take advantage of asymmetric information and use his position to his advantage. A common example is the relationship between the managers and the shareholders of a corporation. In this case, Rep. Jackson is the agent and his campaign donors are the principal. Jackson exploited his role as the representative of his campaign donors' interests. He spent their money on his house, not on his campaign. One has to imagine that this is hardly what the donors had in mind when they signed their checks over.
No comments:
Post a Comment