Season 1, Episode 3: In this clip, Cersei tells her son “The North cannot be held…not by an outsider. It’s too big and too wild.” This can help us understand the principal-agent problem. The principal-agent problem states there is a conflict in priorities between the principal – normally an emperor or some type of ruler – and their agent(s) – people acting on their behalf. This conflict often arises because the principal has weak oversight over the agent, allowing the agent to do as they please. Because the North is so large and wild, it’s hard for the king to convince the lords of the North to act on their behalf. In Imperial China, because of the large size of the empire, the emperors were forced to adopt a decentralized structure of governance because they could not hold enough power. To overcome the principal-agent problem, they tried to not place too many constraints on tax collectors, lowering the incentives they would have to cheat (a.k.a. steal taxes) by implementing a lower tax rate. A lower tax rate then meant there is less of a reward to the tax collectors for being corrupt.