A Principled Agent?

As I wrapped up Econ 450 today, I told the class that the basic theoretical frameworks, including agency theory, should continue to pop up for as long as we both shall live.  And here, from Wired, we have an agent (allegedly) trying to bilk the principal.   The players should be familiar.

The Obama administration accused Sprint today of overcharging the government more than $21 million in wiretapping expenses…

Sprint… inflated charges approximately 58 percent between 2007 and 2010, according to a lawsuit the administration brought against the carrier today.

The Agent says it was just doing what it was told:

Under the law, the government is required to reimburse Sprint for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance,” Sprint spokesman John Taylor said. “The invoices Sprint has submitted to the government fully comply with the law. We have fully cooperated with this investigation and intend to defend this matter vigorously.”

It seems that the Principal gave the Agent plenty of opportunities:

According to records, the number of domestic federal and state wiretaps reported in 2012 increased 24 percent from the year earlier. Overall, a total of 3,395 wiretaps were reported in 2012. Of those, 1,354 were authorized by federal judges, and 2,041 by state judges. The number of federal orders jumped 71 percent. State orders increased 5 percent.