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Problem:
1.Agency Costs(The risk that the agent will shirk a responsibility, make a poor decision, or otherwise act in a way that is contrary to the principal’s best interest )
2.Contract Clauses（Risk of contract breach,incentives include performance-based awards of stock or stock options, profit-sharing plans
3.The relative separation between policy makers and policy implementers leads to the separation of policy making power and policy implementation power, which leads to principal-agent relationship and principal-agent problem in the process of policy implementation, thus leading to the failure of policy implementation.
Solutions:
1. By supervising, motivating and punishing the policy implementors, the principal-agent problem in policy implementation can be effectively governed so as to prevent the failure of policy implementation
2.Review and confirm the legal counsel of both parties before signing the agreement to ensure the legality of both parties.
3. Establish good communication methods for real-time communication to avoid greater mistakes and misunderstandings.

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Challenge：

(1) Inadequate representation of agents. Agents have their own aspirations and do not represent the wider public interest better, so they do not implement the policies of their superiors well.
Administrators may take some actions based on their own interests, which may lead to the policy failure and cause losses to public interests.
When the agent is not chosen by the Principal, so the agent does not have as much incentive to do what the principal asks of them. Conflict of Interest, agent wants to pursue their own interest.

Solution：

(1) Increase the diversity of agents. Ensure a plurality of agents.
(2) Limit the power of the administrator, and implementing policy through the cooperation of all stakeholders, then ensure the realization of the public interest
(3) Control the reporting/monitoring mechanism so that the agent is independently evaluated. Have a clearer representative voting over the elections.

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Main issues :

1 The principal-agent problem in policy implementation focuses on adverse selection and unethical behaviour of policy implementers. Adverse selection means that policy makers are unable to fully and truly understand and grasp the implementation of policies by policy implementers without complete information, and are unable to effectively supervise policy implementers and the implementation process; however, policies cannot be implemented without policy implementers, so policy makers are forced to reach agreements with policy implementers without complete information. The policy implementer may take advantage of the policy maker's 'ignorance' of the implementation process and act opportunistically. For example, they may actively implement policies that benefit them, or they may perfunctorily resist policies that do not benefit them; they may conceal information that is unfavourable to them and exaggerate information that is favourable to them when evaluating the effects of policies.

2 Corruption is the act of a policy implementer who betrays the 'contract' with the policy maker to the detriment of the policy maker and the target group in the pursuit of his or her own interests and to ensure that his or her own effectiveness is maximised.

Solutions：

1 Strengthen oversight of policy implementers and the policy implementation process, both from the 'top down' and the 'bottom up'.

2 Establish an effective incentive mechanism. "With certain incentives, agents can adopt the objectives of their principals as their own for reasons of solidarity".

3. Increase the cost of laziness by increasing penalties for unethical behaviour of policy implementers. The reason why policy implementers act against the wishes and interests of their principals is largely related to the fact that the additional benefits they gain are not easily detected by their principals and thus they can escape punishment. The introduction of clear lines of authority and accountability for policy implementers, effective accountability mechanisms, and a veto system for 'poor implementation' would reduce the benefits of opportunistic behaviour and increase the risk of unethical behaviour, thus helping to deter unethical behaviour.

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Group 6

Challenges:

1)Who to blame:Confused accountability

2)Interest conflict

3)Institutions with different nature have different goals and ideas

Solution

1)Asymmetric information:In the principal-agent chain, the principal and the agent often do not have sufficient information about each other, especially the information disadvantage of the principal relative to the agent is more obvious.

2)Contract design：The main purpose of contract design is the creation of a contract framework between the principal and the agent to address issues of information asymmetry, stimulate the agent’s incentives to act in the best interests of the principal, and to determine procedures for monitoring agents

2)Third-party institutions are responsible for monitoring and evaluation

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First, strengthen the monitoring of policy implementers and the process of policy implementation. It is necessary to improve the transparency of the implementation process of policy implementers, actively promote open government, establish an effective information feedback mechanism and broaden information channels.However, it should also be realised that information asymmetry between policy makers and policy implementers in the process of policy implementation is a phenomenon that can only be reduced but not completely eliminated

Secondly, the establishment of an effective incentive mechanism. "With certain incentives, agents are able to adopt their principals' goals as their own out of solidarity". Therefore, inducing the alignment of interests between policy makers and policy implementers in the process of policy implementation and increasing the initiative of policy implementers to implement policies.

Third, increase the penalties for policy implementers who violate policy objectives and raise the cost of lazy policy implementation.

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Challenge:

1. Information asymmetry, the information asymmetry between the principal and the principal, is easy to cause difficulties in supervision. And the executor is not transparent enough to the entrusted government, which is prone to a series of problems such as "Rent-seeking". Rent seeking in the reconstruction of the old city of Hong Kong: a contractor who asked to remain anonymous described three groups of independent contractors and surveyors who divided the reconstruction projects through a manipulated bidding process, in which the winning bid is usually three times the market standard.

2. The credibility of the government is not strong, and its legitimacy is questioned Decision makers are bounded rational and unable to grasp comprehensive information.

Solution:

Promote information sharing and increase transparency

Citizen accountability and media accountability

Promote universal supervision

Rectify the bureaucratic system

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Group 5

•Effective policy implementation requires a healthy relationship between the principal(s) and the agent(s).

without trust, principles will always doubt the reason behind every policy implementation and the resistance will affect the effectiveness

and the trust is mutual, without trust, the agent might need to make its policy mandatory to make sure the principal will follow.

Without same goal, conflict of interest might happen, agent might implement policy for their own interest rather than for principals

The healthy relationship can easily explain the potential conflict of interest among stakeholders.

•Can you list out all the challenges to maintain this relationship from a public policy perspective?

There may be many units implementing the policy. If there is no standard given to all these units, there may be differences in the policy implementation process.

There may be some “bug” in the policies. These bugs may not be discovered in the policy formulation process. They are discovered only when they are being implemented. Then, the policy may become ineffective/troubling citizens

The problem of the personal interest

•What are the possible solutions to these challenges?

Make formal guideline and ensure they are disseminated to front-line officers implementing the policies.

Regularly evaluate the policy and fine-tune if needed.

Set punishment mechanism for agents who betrayed the principal's interest.

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C：1，There is a motive for the agent to act with the goal of increasing his own interests rather than those of the principal.

2，One agent represents multiple interest groups

3，Information asymmetry between agents and principals

S：monitoring mechanism, long-term performance appraisal, transparency of information

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•Effective policy implementation requires a healthy relationship between the principal(s) and the agent(s).

•Can you list out all the challenges to maintain this relationship from an public policy perspective?

•What are the possible solutions to these challenges?