Principal-agent models, derived from such disparate disciplines as law, finance, accounting, and economics, have become the basis for an extensive set of studies relating bureaucracy to elected officials (see Mitnick 1973, 1975, and 1980; Moe 1982, 1984, and 1985; Wood 1988; Wood and Waterman 1991, 1993, and 1994; Scholz and Wei 1986). Such models also have been extended to presidents' decisions to use force (Downs and Rocke 1994) and to the Supreme Court and its relationship to lower courts (Songer, Segal, and Cameron 1994). Despite this outpouring of research, few studies have directly examined the basic terminology and assumptions of the principal-agent model. In this article our objectives are to examine principal-agent theory critically, to relax some of its restrictive assumptions, and in the process to present a more general theory of relationships between the bureaucracy and its political environment. Although our critique may be relevant to other uses of the principal-agent model, we limit our assessment to its use as a theory of bureaucracy.