Principal-Agent

5An instance in which I participated in a triangle-like relationship is when I did valet in high school. I was an agent of both the valet company and of the country club and its members. 

One example of when the two principals didn't see eye to eye is when members would request that we didn't run to get their car because they either felt bad or because they wanted to have a quick conversation with somebody before their car was brought to the front of the country club. However, our valet company's owner always demanded that we sprint for the guests vehicle so this led to some minor confrontations with the owner of the company. He would see us walking and assume we were being lazy. The way our boss would resolve it was by yelling at us to sprint regardless of what the member said. 

A way to resolve it was by going by the principle that the customer is always right and do as they tell us. However, this satisfies one "master" and ignores management. It can lead to instances where you don't know who you are really working for, the customer or the owner. 

Parallel Experiences Involving Groups

My first experience was working with a team for a Global Studies course. The class was split into groups of five to complete a project and presentation on a war in South America called the War of the Pacific. This was my pleasant experience. I was assigned in a group with all girls that were very studious and organized. We met the first day that we were assigned our project. This allowed us to get a jump-start on the project that allowed us ample time for research and editing. We were also able to practice giving our presentation a couple times. Everybody seemed to get along very well. I think that this was partially because of friendly personalities, and partially because nobody was upset with another member because everybody performed their tasks in an efficient, high-quality manner. The members were also committed to their work. I would say that this was more of a commitment to getting a good grade than because of interesting content, however, because the content of the War of the Pacific was pretty dry. In terms of talent, everybody seemed more than capable of doing their share of the preparation and presentation, and this reflected in our presentation, which resulted in an A. 

My parallel experience was working in a group in a Political Science course. We were assigned to groups of four to complete a project and presentation on the National Park Service and the national parks that they operated. This time, however, my group was very disorganized. Everybody had busy schedules, or claimed to have busy schedules, and was unable to meet until 3 days before it was due. We were still able to put together a decent project, but that is only because of two consecutive all-nighters. Nobody was friendly with each other; everybody just wanted to get their part done and go on their separate ways. The class being a lower-level course, and the project being relatively easy, all the team members had more than enough talent or smarts to accomplish the project in a high-quality manner. It seemed as if the commitment to the class and the course material was not there. Also, this was evident during the presentation, as you could easily tell that our pieces had very little interdependence and was not coordinated well enough to display a healthy dynamic.

Team Production vs. Individual Production

http://campaignstops.blogs.nytimes.com/2012/02/20/how-to-get-the-rich-to-share-the-marbles/?ref=opinion&_r=0

I loved this article. I think that the biggest problem facing wealth inequality in our country is the morals behind this inequality. People think too economically some times. I know that this sounds bad for an economics class, but morals need to come into play more often. For example, it may be legally and economically alright for a business owner to pay his workers minimum wage for hard labor while his profits skyrocket into the millions, but is this the moral thing to do? People need to ask themselves sometimes, "Okay, I claim to believe in God and go to church every Sunday, but what does Jesus really think of me as I drive home from church in my new BMW, passing all the homeless people on the side of the street?". Don't get me wrong, I'm all about success and business and providing a comfortable life for your family, but there are ways of doing it that are honest and moral. I also find it interested that the article quotes JFK on his speech against Communism, when the basic idea of Communism is what the article is about, which is providing fairness to all.

I have had personal experiences which go FOR team production and shared rewards, and those that go AGAINST team production and shared rewards.

My first experience was working valet in the Chicagoland area during high school. Our tip system favored team production, as all the tips that were received during work were split evenly at the end of the night between all the valet attendants. This worked and it didn't work. It worked in the sense that everybody felt equal at the end of the night. However, in terms of work load, it didn't always work. Some people were motivated by this, and knew that a collective effort to get cars faster, be nicer to guests, etc., would result in more tips for everybody at the end of the night. Some people were not motivated by this, and would have the mentality that they didn't need to work hard because they would still receive the same tips, and would also create resentment among the workers. I guess it just depended on what type of worker you were.

My second experience is delivery driving for D.P. Dough while in college. We have a different tip system where everybody keeps whatever tips they make throughout the night. This works in that it requires self-motivation. Drivers come to realize that the faster they drive, the less things they forget, etc., will result in better tips, and that each driver is responsible for their own pay. This creates fairness in that each driver makes tips equal to their amount of effort. However, it can also be unfair. For example, as drivers, we are supposed to automatically take whatever orders are ready when we get back to the store and works on a first-come, first-serve basis (in other words, whoever got back first is next in line, second back is second, etc.). If you have good luck, then the orders that will be ready when you come back are prepaid and have big tips already. If you have bad luck, then the orders will be prepaid with small tips. This can create resentment if a driver keeps getting assigned to bad tipped orders and will feel it is unfair.

I think that the biggest reason why the valet shared tips was because everybody worked in the same vicinity and were accountable for their actions. It is also hard to be dishonest about sharing tips when everybody is working together. In contrast, I think that the reason why delivery driving uses individual tips is because it is too hard to monitor each drivers actions, and drivers can be dishonest about the amount of the tip.

Transfer Pricing / Allocation

The hypothetical situation is that a university could use credits that are allocated to students to be used for priority access to certain things. A couple things could be a candidate for a system that uses credits for priority access.

Sports tickets and items are things that could use this system. For example, if there is a limited amount of "good" seats at a football game, students could use their credits to have an advanced option to buy the tickets, with competition coming from other students as well as from non-students.

Another thing could be for school books and the condition of used books. A student could use their credits to gain access to higher-quality used books, assuming the different levels of quality doesn't affect the price (flat rate for used books).

Student parking is another thing that could benefit greatly from a system like this. Students could use their credits to have priority access to better and closer parking.

I do not believe that a credit system would be fair when it comes to registering for a class, simply because there is no merit or seniority involved. However, I believe it could be utilized in terms of class times, with students being able to use their credits to, for example, register for a 11am section instead of a 9am section.

I would use my credits for class times. I believe that a major factor in a student's success is the time that they have classes. I am unsure of the exact data, but I would be willing to bet that a class's average GPA is higher in sections scheduled later in the day. This would be my main priority.

If the administered price for priority access was too low, students would use their credits less sparingly, and it wouldn't create the fixed economy that is desired. However, if the administered price for priority access was too high, students would be too cautious with their credits and might create an excess of unspent credits.

I believe the best process would be to have a bidding process for priority access that would vary in lengths depending on the level of priority/item desired. For example, if a student has 100 IB (Illinibucks), that person could bid 20 IB for first access good seats at a football game. However, if another student wants the seats more, that student could bid 25 IB. This is fair because a student shouldn't have to pay a high price if no other students want an item and would let the market determine things importance. I believe this system would let the students decide what each thing was worth and would be the most fair.

Managing Future Income Risk

My future income is a major factor in my current decision-making processes. I have made decisions over the last couple of years that I feel have steered me in the right direction towards a safe income. 

My first decision was deciding a major. I come from a blue-collar family and area, so a degree in something that wasn't business-related or a high-paying profession wasn't an option. This made me decide on Economics, because it gives me a good background in how the economy works and how the economy can be manipulated for benefit. I believe that this will lead me towards a higher income profession.

Another decision was how I chose to spend my summers. However, the decisions I made in terms of work were geared towards immediate relief. Because of financial situations, I was forced to take higher-paying jobs over the summer in lieu of internships that would provide me with a more beneficial experience. 

In terms of loans for college, I chose to not borrow fully from the government and financial institutions because I feared accumulating debt. However, I still chose to loan a substantial amount because I believed it would pay off in the long-run to attend a top-notch university such as the University of Illinois at Urbana-Champaign. 

Other decisions I made were clubs I joined that I believed would look the best on resumes for future job prospects, a fraternity I joined because of extensive networking through tens of thousands of graduates, and choosing to work while I am at school to help alleviate financial obligations. 

I have three older brothers who handled this situation very differently. My oldest brother graduated from a university with a degree in Health Management, and took on much debt doing so, and is still having a hard time gaining a solid financial footing. My next oldest brother was the responsible one. He majored in Business Administration and chose to go to a small school where he received an athletic scholarship so that he would not accumulate much debt. He now has a good job and, while he is still in debt from school, is managing it very well. My next brother graduated from a university with a degree in Accounting, and like the rest of us, had to take loans to pay for it. However, when he graduated, he decided that joining the U.S. Navy was his best option, and is currently managing his future very well.