Friday, November 1, 2013

Tri-lateral Principal-Agent Model

I think one situation where this arises for a lot of people is their parents, or family. For me, growing

up, my parents were usually on the same page as everything. They would almost always agree on a

variety of going ons in my life, including academics and extracurriculars. But one instance where

they didn't agree was a choice between playing the violin or playing soccer. When I was a kid, I

picked up both, starting the violin and continuing for several years, and likewise with soccer. As I

grew older, it quickly became apparent that I could not hope to do both. Academics were the priority

and the workload grew considerably heavier in high school when I took many AP classes. At first we

decided on a compromise: we decided that I would play both until to the point where the time

consumption of both grew unbearable. At that point, I would decide which extracurricular to keep. In

reality, I suppose the decision all came down to me. Choosing one over the other would certainly

disappoint one of my parents but of course it was up to me and which one I thought I was better at.

It was a hard decision but in the end, I chose soccer over violin. This was just one tame example of

differences in views and one agent stuck in between two different parties.

But like I said earlier, a lot of these differences can arise for people with parents or parents and other

family members. One common example is who a guy or girl will marry - one parent might approve,

the other might disapprove. Or some family members will approve and most won't approve. A lot of

times, the agent will fail someone (i.e. the old adage, you can't make everyone happy), but a few

times it is possible for the agent to satisfy both parties. At least these examples are relatively mild in

comparison to when agents have to make a choice between family and country or love and country.

3 comments:

  1. That there can be triangular relationships between a kid and his parents is certainly true. However, normally we don't think of family relationships from the perspective of the principal-agent model. That model typically is applied to a work setting - the agent is doing a job for the principal. The particular issue of which instrument to choose in high school or getting approval to marry or not really doesn't fit that. There can be conflicting pressures, to be sure, so the feeling of being tugged both ways certainly can be present. But we don't think of these things as jobs.

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  2. I can definitely relate to the principal agent problem between myself and my parents. My parents were similar in the sense that they demanded a lot from me academically. While school was definitely a main priority for me, there were a lot of things in my childhood that I could not participate in because it got in the way of my academics. I've always wanted to hold a part time job in high school or participate in athletics but this was considered to be a distraction from my school work. There are many ways in which the principal agent problem can be present in everyday life situations outside of the organization.

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  3. I think your example was great in the sense that everyone can relate to it. There are many situations throughout my life that have made my father happier than my mother and vice versa. It is interesting to see how much that can influence a person's decision. In my personal experience I've had to make decisions on choosing between one thing or another and have chosen something that wasn't one of the first original two options just to avoid conflict. I think this can possibly be true in a work setting, but not as easily since work has regulations and strict rules.

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