In essence agency theory postulates that executive employees of organisations act as agents of the organisations owners. They don’t own the organisation and so have a tendency to act in their own interests rather than those of the organisation.Can you explain what you mean by 'agency behaviours'? I think you are making the point that there is no source of negative feedback for a council, unlike a business which can try to analyse why it is losing customers?
In the corporate world manifestations include excessive boardroom pay. IMHO that’s now a massive problem in local government.
But it’s fundamentally different; corporate executives who ramp up pay have to perform or the company goes broke and they are near unemployable. Public sector executives can act in self with self-interest, get found out then get another big ticket role.